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Initial unemployment claims continue to trend lower

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Yahoo Finance's Emily McCormick joins The First Trade to break down the latest data from the U.S. Labor Department. She also shares details on potential layoffs at the German airline Lufthansa, plus layoffs in the San Francisco Bay Area at big tech companies.

Video Transcript

ALEXIS CHRISTOFOROUS: We have stock futures sharply lower this morning. Investors worrying about a new wave of coronavirus infections and the Fed's gloomy outlook for the economy, specifically the job market.

Taking a look at [AUDIO OUT] those right now, things are going from bad to worse as we near the opening bell. Dow futures down about 900 points now, a loss there of more than 3%. In the broader market, the NASDAQ, which we know topped 10,000 for the first time ever this week, giving a little bit of that back now, down about 2%. And we have S&P futures off about 2 and 1/2%.

Now following their policy-setting meeting yesterday, the Fed did the expected. It held interest rates near zero and promised to run stimulus programs, quote, "forcefully, proactively, and aggressively for years if necessary."

But it's what Fed Chair Powell had to say about the job market that really spooked investors. He said it could take years to recover.

JEROME POWELL: We're doing a fair job of getting through these first few months-- more than a fair job. The question though is that group of people who won't be able to go back to work quickly, what about them? And that could be many millions of people, you know, in parts of-- who worked in parts of the economy that will be the slow ones to recover.

ALEXIS CHRISTOFOROUS: Now, there are signs emerging this morning that Americans are slowly returning to work. We've got the latest on jobless claims, and it shows another 1 and 1/2 million Americans filed for first-time unemployment benefits in the latest week. That is down from the previous week, which is at 1.88 million.

Emily McCormick is here with us to break it down. And, Emily, I guess in another encouraging sign, continuous claims are also beginning to fall.

EMILY MCCORMICK: Absolutely, Alexis, but still very elevated numbers that we're seeing in this jobless-claims report for the week ended June 6. So we had the US economy still seeing more than a million individuals filing new unemployment claims on a weekly basis amid the coronavirus pandemic. For that last week, we saw weekly initial jobless claims total 1.542 million. Now, that was just slightly below expectations for 1.55 million, and it was also below the volume of last week's claims at 1.9 million for that prior week.

Now, this brought the total number of new claims filed since the week ended March 20 to more than 44 million. It was at least, though, the 10th straight week now that the level of new claims fell versus the previous week, although filings remain historically high and they're still well more than double their worst week from the Great Recession.

Taking a look by state, we saw California with the highest number of new claims at 258,000 for an increase of about 29,000 versus the previous week. This was followed by Florida with new claims at about 110,000 last week. Although as has been the case recently, many states did see declines in new claims versus the week earlier.

And, finally, do want to take a look at those continuing unemployment claims because as you mentioned, that did decline versus the week prior for the week ended May 30. We saw those come in at about 20.9 million, above the 20 million expected but below the prior week's claim-- the continuing claims at 21.3 million. So again, still seeing both new and continuing unemployment claims elevated but at least down from the last report that we got. Alexis.

ALEXIS CHRISTOFOROUS: And, Emily, I know we have some fresh layoffs announced today over in Germany. The airline Lufthansa going to be getting rid of tens of thousands of jobs. What's the latest there?

EMILY MCCORMICK: Well, taking a look at Lufthansa, the company said today it's planning to cut 26,000 jobs, including 22,000 full-time positions, and half of those are expected to occur among staff in Germany. Now, this announcement we got today is an extension of what the company has previously done recently to bring costs down, particularly among its workforce, as it's had to idle many of its aircraft amid the slump in travel demand globally that we've seen given the pandemic.

So earlier it had already announced about 87,000 of its around 137,000 staff were requested to just work fewer hours. So, really, this is just another move that Lufthansa is taking, as with many airlines, including those carriers in the US, to try to bring costs down as travel demand is still low.

ALEXIS CHRISTOFOROUS: And also, I mean, we're seeing that these layoffs are happening across many different sectors in and out of tech. Today, IBM and even Lyft announcing they're going to be laying off workers. What do you know about that?

EMILY MCCORMICK: That's right, Alexis. So taking a look at the data that we have today-- this was compiled by Mercury News among California's Employment Development Department data. So these aren't necessarily all new announcements of layoffs, but it is showing more granularity of how many of these are taking place in the San Francisco Bay Area specifically.

So for IBM, for example, IBM said it's planning to layoff 140 individuals in San Jose effective July 20. And then looking at Lyft, it disclosed its plans to lay off 325 employees in the San Francisco area.

Now Lyft, for example, had said in a filing in late April it planned to lay off nearly a thousand employees across the company or about 17% of its workforce. So many of this layoff data that we're getting today is just an extension of these previous announcements and showing geographically where these layoffs are taking place. Alexis.

ALEXIS CHRISTOFOROUS: All right, Emily, thanks for that.