(Bloomberg) -- The U.S. labor market is showing the earliest signs of recovery, according to Goldman Sachs Group Inc.

A drop in continued jobless claims, especially in states that reopened earlier than others, suggests rehiring by businesses may be starting to turn the tide, analysts led by New York-based economist Jan Hatzius wrote in a report to clients Sunday.

The economists cautioned that jobless claims numbers send mixed signals that make data hard to interpret. At an earlier stage in the crisis, initial claims for unemployment benefits, which continue to exceed 2 million per week, had been a good predictor of the overall trend. As businesses start rehiring, though, continued claims for benefits may become a better gauge.

Goldman’s economists said they had been expecting unemployment to be at its worst in June, at 25%, but now think the peak may have occurred last month, when the jobless rate reached about 22%, according to their calculations.

Employment should improve fairly rapidly in the second half of the year, they said, because most layoffs have been temporary rather than permanent.

Still, changes to the Paycheck Protection Program, which are likely to pass Congress, could weaken the incentive for businesses to rehire, they said.

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