U.S. strug­gles de­spite re­open­ings

Calgary Herald - - FINANCIAL POST - LU­CIA MUTIKANI

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.

AN­THONY BEHAR/SIPA USA FILES

Al­though busi­nesses have re­opened in many U.S. states af­ter COVID-19 shut­downs, nu­mer­ous companies are cut­ting jobs at nearly the same pace as oth­ers are hir­ing.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.