US unemployment falls to 11%, but new shutdowns are underway

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US unemployment falls to 11%, but new shutdowns are underway

Thursday, July 02, 2020

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WASHINGTON, United States (AP) — US unemployment fell to 11.1 per cent in June as the economy added a solid 4.8 million jobs, the government reported Thursday. But the job-market recovery may already be faltering because of a new round of closings and layoffs triggered by a resurgence of the coronavirus.

While the jobless rate was down from 13.3 per cent in May, it is still at a Depression-era level. And the data was gathered during the second week of June, just before a number of states began to reverse or suspend the reopening of their economies to try to beat back the virus again.

“This is a bit of a dated snapshot at this point,” said Jesse Edgerton, an economist at JP Morgan Chase.

The news came as the number of confirmed infections per day in the US soared to an all-time high of 50,700, more than doubling over the past month, according to the count kept by Johns Hopkins University.

The spike, centred primarily in the South and West, has led states such as California, Texas, Arizona and Florida to re-close or otherwise clamp down again on bars, restaurants, movie theatres, beaches and swimming pools, throwing some workers out of a jobfor a second time.

President Donald Trump said the jobs report shows the economy is “roaring back,” though he acknowledged there are still areas where “we're putting out the flames” of the virus.

Economists expect the recovery to take longer than Trump's optimistic projections, with the unemployment rate likely to be near double-digit levels by year's end.

“Even as we move into the second half of the year, a large number of people will still be looking for work,” said Eric Winograd, senior US economist at asset manager AllianceBernstein.

The shutdowns over the past two weeks will be reflected in the July unemployment report, to be released in early August.

While the job market improved in June for a second straight month, the Labor Departmentreportshowed that the US has recouped only about one-third of the colossal 22 million jobs lost during the lockdowns this spring.

Layoffs are still running high: The number of Americans who applied for unemployment benefits fell only slightly last week to 1.4 million,according to another report. Though the weekly figure has declined steadily since peaking in March, it is still extraordinarily large by historic standards.

And the total number of people who are drawing jobless benefits remains at a sizable 19 million.

In an ominous trend contained in the Labor Department report, the number of Americans who said they had lost their jobs permanently rose by 600,000 last month to nearly 2.9 million.

Many businesses — particularly small ones — are shutting down for good even though the lockdowns have been largely lifted.

The job gains of the past two months have partly resulted from unprecedented levels of government spending, including US$1,200 stimulus checks, more than US$500 billion in grants to small businesses, and an extra US$600 a week in unemployment benefits.

Those payments enabled millions of Americans to cover the rent and other bills. Yet those programs are expiring or tailing off. The additional US$600 in unemployment ends July 31.

“We could see a huge cliff,” said Julia Pollak, labor economist at ZipRecruiter. “Those expanded benefits will expire before new hiring has really picked up.”

Congress is debating another relief package. Treasury Secretary Steven Mnuchin said Thursday he supports something that is “much more targeted” to businesses that need it.

Hotels, restaurants, bars and casinos added 2.1 million jobs last month, the most of any industry. Retailers gained 740,000.

While unemployment fell in June for all groups, it dropped faster for whites than for Blacks or Latinos. The rate among white people was 10.1 per cent. Black unemployment fell to 15.4 per cent from 16.8 per cent. Among Latinos, unemployment dropped to 14.5per cent from 17.6 per cent.

The number of laid-off workers seeking unemployment benefits rose last week in Texas, Arizona and Tennessee. It fell in California, but was near 280,000. That's more than the number of people who were seeking jobless benefits in the entire country before the outbreak took hold in March.

McDonald's has paused its reopening efforts nationwide, and Apple is re-closing scores of its stores in the United States. Credit and debit card data tracked by JPMorgan Chase shows that consumers reduced their spending last week after having increased it steadily in late April and May.


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