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Lehigh Valley’s Unemployment Rate Drops Amid COVID-19 Pandemic

By Nicole Radzievich Mertz on June 30, 2020

Lehigh Valley’s unemployment rate in May dropped to 13.7%. (Graphic/Liz Martin)

Lehigh Valley’s unemployment rate fell from a historic high of 16.6% in April to 13.7% in May, consistent with the nationwide drop but still nearly three times higher than before the COVID-19 pandemic triggered business disruptions, according to new data released June 30.

In Lehigh and Northampton counties, 48,300 of the 353,000-person work force were counted as unemployed in May, according to the Pennsylvania Department of Labor and Industry.

Nearly 90,000 workers in Lehigh Valley have filed initial unemployment claims since Gov. Tom Wolf declared a shutdown of non-essential businesses in March, though the number of new claims filed weekly is dropping. The number of new weekly claims leveled off in June but are twice as high as they were in weeks before the pandemic.

Some of those business restrictions have been lifted in recent weeks, and Lehigh Valley entered the green phase of reopening June 26, which is not reflected in May’s unemployment rate. The regional unemployment rate for June will be released on July 28.

Some context: The data coincides with businesses spending aid from the federal Paycheck Protection Program, forgivable loans to businesses that hire back employees. Also, there was an uptick in job ads for essential workers in industrial sectors such as health care and e-commerce. Construction jobs in Pennsylvania were allowed to resume May 1.

The unemployment rate in May does not reflect the gradual opening of businesses, including outdoor dining, when Lehigh Valley entered the yellow phase June 5 and green phase June 26.

The statewide unemployment rate for May was 13.1%, down 3 percentage points since April.

Historical perspective: The drop comes after a historic spike in April’s unemployment rate. That was the first time the monthly unemployment rate in Lehigh Valley hit double digits since 1983. It was 15.1% in January 1983. During the Great Recession, unemployment peaked at 9.3% the winter of 2010. In recent months before the COVID-19 business disruptions, the unemployment rate was relatively low at 4.6% the first two months of the year.

What’s next: Unemployment claims continue to be filed but at a slower pace. Since the week ending June 6, 4,921 people have filed new unemployment claims. In Lehigh County in the week ending June 20, 19.7% was from the health care and

New online job ads and initial unemployment claims provide a real-time peek into the economy. (Graphic/Liz Martin)

social services sector, 16.7% from logistics sector, 12.9% from the accommodation and food services sector, and 12.7% from the administrative and waste sector.  In Northampton County for the week ending June 20, 17.2% of the initial claims were from the accommodation and food services sector, 15% were from the health care and social services sector, 14.5% from logistics sector and 13.2% from manufacturing sector, according to the Pennsylvania Department of Labor and Industry.

Meanwhile, online job postings, which indicate employers’ attitudes about the economy, are steadily rising after dropping amid the pandemic. There have been nearly 6,000 new online jobs ads in the Lehigh Valley since the beginning of June. There have been 17,425 ads posted by 4,100 employers in Lehigh Valley over the last 30 days, according to JobsEQ Economics Platform. Among the most advertised positions in Lehigh Valley are retail salespersons, stockers and registered nurses.

What other indicators say: The national Gross Domestic Product, which measures goods and services output, decreased at an annual rate of 5% during the First Quarter, the first decline since 2014, according to revised estimates released by the U.S. Department of Commerce’s Bureau of Economic Analysis. Local GDP figures are reported annually. Lehigh Valley had a GDP of $41.2 billion in 2018.

Lehigh Valley companies exported $907 million in the First Quarter, down 2% from that quarter in 2019 but up from $896 million in the Fourth Quarter of 2019, according to the U.S. Census Bureau.

What the Congressional Budget Office says: The agency is scheduled Thursday to release “An Update to the Economic Outlook: 2020 to 2030,” the first complete 10-year projection since January. It will update the interim projections, which looked at 2020 and 2021, it published in May, and it is expected to be consistent with those projections. In May, the CBO projected the GDP would begin to show growth in the Third Quarter. It also forecast unemployment would fall from a high of 15.8% in the Third Quarter to 11.8% by the Fourth Quarter this year. The CBO cautions that there is higher degree than normal of uncertainty in projections because it is still unknown how the pandemic will unfold, how social distancing will affect the economy, and what future policies will be enacted.

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