U.S. struggles despite reopenings
WASHINGTON The number of Americans filing claims for unemployment benefits fell moderately last week as a second wave of layoffs partially offset hiring by businesses reopening, suggesting the labour market could take years to recover from the COVID-19 pandemic.
Other data on Thursday reinforced expectations the economy would contract in the second quarter at its deepest pace since the Great Depression.
Though orders for key capital goods rebounded in May, the increase recouped only a fraction of the prior declines. The goods trade deficit widened sharply last month as the respiratory illness disrupted trade further.
“All is not well in this economy,” said Chris Rupkey, chief economist at MUFG in New York.
“While it counts as good news that businesses are ordering more equipment in May as the states reopened, the second wave of the pandemic may keep companies cautious in the months ahead when it comes to making new investments in the country’s future.”
Initial claims for state unemployment benefits fell 60,000 to a seasonally adjusted 1.48 million for the week ended June 20, the Labor Department said. There was a jump in claims in California, which together with Texas and Florida, has seen a surge in novel coronavirus cases. Economists polled by Reuters had forecast 1.3 million applications in the latest week.
Claims have dropped from a record 6.867 million in late March, but they remain more than double their peak during the 2007-09 Great Recession. The report, the most timely data on the economy’s health, also showed 30.6 million people were receiving unemployment cheques in the first week of June, about a fifth of the labour force.
Businesses in many states reopened more than a month ago after shuttering in mid-march to try to slow the spread of COVID -19. Companies are hiring, but others are cutting jobs at nearly the same pace.
The economy slipped into recession in February. From manufacturing to the transportation, retail and leisure and hospitality industries, firms are restructuring to adapt to a vastly changed landscape, leading to layoffs and bankruptcies.