Newsletter: ‘In Short, the Crisis Continues’
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Filings for weekly unemployment benefits rose for the first time in nearly four months, a sign the jobs recovery could be faltering. Initial unemployment claims rose by a seasonally adjusted 109,000 to 1.4 million for the week ended July 18, halting what had been a steady descent from a peak of 6.9 million in late March. The data also show that the number of people receiving benefits has shrunk in recent weeks. Taken together, claims and benefits totals suggest new layoffs are being offset by hiring and employers recalling workers, though at a slower pace than a few weeks ago, Eric Morath reports.
Last week’s increase in applications came after several states imposed new restrictions on businesses such as bars and restaurants when coronavirus cases rose.
WHAT TO WATCH TODAY
IHS Markit’s U.S. manufacturing index for the opening weeks of July is expected to rise to 52.0 from 49.8 at the end of June. Services are expected to rise to 51.0 from 47.9. (9:45 a.m. ET)
U.S. new-home sales for June are expected to rise to an annual pace of 702,000 from 676,000 a month earlier. (10 a.m. ET)
The Baker Hughes rig count is out at 1 p.m. ET.
Ugly, Bad and Good
Jobless claims aren’t the only data suggesting trouble for the labor-market recovery. U.S. employers added 4.8 million jobs in June, helping recoup some of the massive losses from earlier in the year. But the Census Bureau’s weekly household pulse surveys, which tracked the big rise that month, now indicate that a resurgent pandemic has reclaimed most of those gains. Of course, other indicators point to continued job gains, the weekly survey is a new product and it isn’t meant to stand in for the official monthly report. Even so, the dropoff is a worrisome sign for a struggling labor market.
Time is running short for millions of unemployed Americans. Senate Republicans scrapped their plans to release a proposal for the next coronavirus relief bill after continued differences with the White House on unemployment insurance and direct cash payments. With the delay, Republicans won’t roll out their roughly $1 trillion legislation until next week, further compressing an already tight timeline to reach an agreement with Democrats and pass a fifth coronavirus relief bill. A $600 weekly supplement to state unemployment benefits is set to expire July 31, though it will effectively end in many states this weekend, Andrew Restuccia and Andrew Duehren report.
Once Congress does approve an economic relief package, a second round of stimulus payments could reach many Americans faster than last time. The Internal Revenue Service now has procedures, online tools, bank-account information and coordination with other agencies that it didn’t have set up in advance when the first round of payments was approved in the spring, Richard Rubin reports.
Another bit of good news: Some of the businesses hit hardest by the pandemic are driving the jobs recovery. Health-care providers and restaurants—which closed during lockdowns—have recalled millions of laid off workers. Job growth has also been boosted by increased demand in a handful of industries, including logistics firms, financial services and retailers such as furniture stores, Eric Morath and Kim Mackrael report.
Corporate America Doesn’t Expect This to Be Over Soon
Hershey said subdued Halloween celebrations this year as a result of the coronavirus pandemic could hurt candy demand during a holiday that typically generates a tenth of its sales. The owner of Reese’s and Jolly Rancher said it is planning to make less Halloween-themed candy to avoid having loads of leftovers that it would have to pull back or try to sell at a discount, Annie Gasparro reports.
AMC Entertainment is pushing back the reopening of its U.S. theaters to mid-to-late August, after a number of summer blockbusters delayed their release dates. The nation’s largest theater chain previously said it would reopen at the end of July. U.S. theaters closed and Hollywood studios halted the release of major motion pictures in March as the pandemic took hold, and they remain in a holding pattern as several states are experiencing a resurgence in Covid-19 cases, Dave Sebastian reports.
Walt Disney canceled the planned August release of “Mulan” and said it would also delay the release of future installments in the “Avatar” and “Star Wars” series by a year, R.T. Watson and Erich Schwartzel report.
American Airlines and Southwest Airlines said they were tempering expectations for an air-travel recovery, as mounting coronavirus cases have driven down bookings by as much as 80% in some parts of the U.S. Southwest said cancellations are picking up and demand looks weaker heading into fall. Executives at American said bookings have started to slide and business travel, which usually picks up after Labor Day, shows no signs of resuming, Alison Sider and Doug Cameron report.
“In short, the crisis continues,” American Chief Executive Doug Parker said.
Encouraging news from Europe: Purchasing managers indexes for the U.K. and eurozone returned to growth this month, with output advancing at the fastest rate in years. The data suggest some economic rebound in the third quarter after a disastrous spring. “The concern is that the recovery could falter after this initial revival. Firms continue to reduce headcounts to a worrying degree, with many worried that underlying demand is insufficient to sustain the recent improvement in output,” IHS Markit economist Chris Williamson said. Manufacturing and service-sector activity are still contracting in Japan, though not as severely as prior months. U.S. data are out at 9:45 a.m. ET.
There’s Gold in Them Thar Hills
The price of gold neared an all-time high that has stood for almost nine years on Thursday, punctuating a furious rally driven by anxious investors seeking refuge from the coronavirus-induced economic slowdown. Prices have risen nearly 25% this year, extending an advance that began early in 2019. The coronavirus has sparked a global gold rush, with physical traders in London and New York trying to get their hands on more metal and individuals around the world ordering bars and coins, Amrith Ramkumar reports.
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