More bad news expected in unemployment numbers

  • >> The New York Times
    Published: 2020-05-21 16:50:46 BdST

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The employee entrance of a Hyatt hotel is unused while the hotel is completely closed to guests during the coronavirus disease (COVID-19) outbreak, in Washington, US May 8, 2020. New unemployment data shows the US economy lost a staggering 20.5 million jobs in April. REUTERS

The coronavirus pandemic has produced a somber Thursday ritual: the tally of unemployment claims across the United States.

In its report at 8:30am Eastern, the Labour Department is expected to put the figure for last week at 2.5 million, according to a consensus of analysts cited by Bloomberg. That would mean new claims are levelling off, but not declining, and would bring the nine-week total to about 39 million.

A recent household survey from the Census Bureau suggests that the pain is widespread: Almost 50% of adults said they or a member of their household had lost employment income since mid-March. Nearly 40% expected the loss to continue over the next four weeks.

And there is increasing concern that many jobs are not coming back, even for those who consider themselves laid off temporarily.

Nicholas Bloom, a Stanford University economist who is a co-author of an analysis of the pandemic’s effects on the labour market, estimates that 42% of recent layoffs will result in permanent job losses. “I hate to say it, but this is going to take longer and look grimmer than we thought,” he said of the path to recovery.

Global markets cool as investor optimism ebbs.

Asian markets traded flat Thursday despite another exuberant day on Wall Street, while other indicators suggested investor enthusiasm was waning.

Major markets in Tokyo, Shanghai and Hong Kong teetered between gains and losses at midday, despite a jump of 1-2% in Wall Street indexes Wednesday.

Further clouding the outlook, futures markets were predicting Wall Street would open lower. Prices for U.S. Treasury bonds rose, which is a sign of negative investor sentiment, as wary investors like to park their money in American debt.

Wall Street rose Wednesday on continued signs of a coronavirus recovery, but Asian investors woke up to more negative news. Japanese trade figures underscored the weakness of demand for the goods that its factories make. Heated rhetoric in Washington against China raised the prospect that relations between the world’s two biggest economies would deteriorate further. Investors also worried about worsening tensions between China and Australia, a country that depends on Chinese demand to fuel big parts of its economy.

Investors are awaiting word on China’s government spending plans, which are set to be disclosed Friday when the country’s lawmakers meet for their annual conclave. While China’s economy is showing signs of emerging, its consumers remain reluctant to spend. Beijing faces growing pressure to increase spending to keep growth chugging along.

In other markets, oil continued to rise on futures exchanges amid signs that major producing countries are sticking with plans to curb output.

Wall Street rallies and oil prices continue to climb.

Stocks rose Wednesday, rebounding from a late drop the day before, as investors were cheered by some strong results from retailers and another jump in oil prices lifted shares of energy producers.

Markets have been volatile this week, with stocks rallying Monday and then falling Tuesday, mostly as investors assessed a drugmaker’s claim of progress on a coronavirus vaccine. The drugmaker, Moderna, said that a very small early-stage trial of the vaccine had shown potential.

But reporting that questioned the specificity of that claim knocked stocks back in the final hour of trading Tuesday.

On Wednesday, more retailers reported better than expected results that encouraged investors. Lowe’s, the home supplies chain, reported an increase in comparable store sales in the first three months of the year. Target reported that digital sales in the first quarter had surged by 141%, though its shares fell slightly. Walmart, which had reported soaring sales the day before, added to its recent gains.

Delta Air Lines and United Airlines both jumped. Delta’s chief executive said in a television interview that the airline was likely to increase flight capacity during the summer as travel started to pick up, and United said it was working on a plan with Clorox and the Cleveland Clinic to reduce points of contact and promote social distancing for travellers.

The S&P 500 rose nearly 2%, and stocks in Europe also ended higher.

Oil prices continued their recent rally, with the US crude benchmark climbing more than 5% above $33 a barrel. A number of energy stocks also rallied. Chevron and Exxon were each up about 3%.

After sinking to once unthinkable lows, oil prices have rebounded this month after oil producing nations cut output and consumption also picked up.

© 2020 New York Times News Service