The US labor market made greater progress than expected last month digging out of a deep hole, yet optimism over the rebound was tempered by stubbornly high layoffs and a resurgent COVID-19 outbreak across the nation.
Thursday’s simultaneous release of the monthly employment report and the weekly jobless claims data offered diverging snapshots of the economy: one reflecting a flurry of rehiring — particularly at restaurants and retailers — as state economies reopened; the other reflecting a jump in new virus cases, which has led many of those same states to halt or even walk back reopening plans.
While US President Donald Trump said the jobs figures proved the economy is “roaring back,” the pace of recovery might slow or even stall if employers grow cautious and delay rehiring workers — some have already been laid off a second time.
Photo: Reuters
Paired with the coming expiration of the federal government’s extra US$600 in weekly unemployment benefits, the economy could take another hit in the months ahead.
Even a decade from now, the jobless rate would still be above pre-pandemic levels, according to Congressional Budget Office projections released on Thursday.
“No one should be expecting we’re on a straight trajectory higher,” BMO Capital Markets senior economist Jennifer Lee said.
Initial jobless claims are the “worrying part” of Thursday’s figures, and “it’s going to be a few steps forward and a couple steps back,” she said.
Payrolls rose by a more-than-expected 4.8 million last month after an upwardly revised 2.7 million gain in the prior month, US Department of Labor figures showed.
The data, which offer a snapshot of mid-month conditions, also showed the unemployment rate fell for a second month to 11.1 percent. That was a bigger decline than anticipated, but the rate still remains far above the pre-pandemic half-century low of 3.5 percent.
Meanwhile, a separate weekly report showed initial applications for unemployment benefits in state programs remained extremely elevated last week, falling by less than expected to 1.43 million new applications. Continuing claims — or claims for ongoing unemployment benefits in state programs — rose slightly to 19.3 million in the week ended June 20.
The increase in payrolls was led by leisure and hospitality and retail, illustrating the effect of the easing of business restrictions. Healthcare also saw increases, as doctors’ and dentists’ offices reopened.
It’s a “little more disconcerting that we’re not seeing broad-based gains across industries,” Lee said.
Also, state government payrolls fell by another 25,000 — the fourth straight decline — as budget situations grew more dire amid falling tax revenues.
Beneath the headline numbers are even bigger underlying trends. About 17.8 million Americans remain unemployed, down from 23.1 million in April, indicating that only about a third of the jobs lost during the pandemic have been recovered.
Former US vice president and Democratic presidential hopeful Joe Biden said on a livestream on Thursday that the positive jobs report does not compensate for the scale of the health crisis.
“There is no victory to be celebrated,” he said. “We’re still down nearly 15 million jobs, and the pandemic is getting worse, not better.”
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure