Washington: Job losses from the coronavirus pandemic in the United States reached 22 million on Thursday, government data said, as President Donald Trump vowed to unveil plans to reopen the world´s largest economy.
The new weekly unemployment claims data from the Labour Department indicates US employers purged 5.2 million jobs last week, a massive number brought about by business shutdowns and movement restrictions ordered to stop the virus´s spread.
And separate Census Bureau data detailed the virus´s damage to the housing market, with homebuilding sinking by more than 22 percent in March, while a Federal Reserve report showed plunging manufacturing activity in the northeastern US.
But the most shocking data was the jobless report, which was a smaller increase from last week, perhaps indicating the wave of layoffs had plateaued, but nonetheless an unprecedented figure.
“Claims likely have peaked,” said Ian Shepherdson of Pantheon Macroeconomics, “but this (is) nothing more than the end of the beginning.”
Trump was expected later in the day to outline his steps to bring the US economy back online after saying on Wednesday that his “aggressive strategy” against the outbreak had worked, and that the country had passed the peak of new cases. Yet nearly 2,600 people died from the virus in the US alone in the 24 hours to Wednesday evening, joining the 133,000 killed worldwide by the disease that´s infected more than two million.
Wall Street was mixed, with the S&P 500 and Nasdaq in positive territory but the Dow slightly negative around 1515 GMT. The unemployment report covering the week through April 11 showed initial claims for benefits nearly 1.4 million lower than the prior week.
In the comparable week of last year, only 203,000 people filed first-time claims for jobless benefits, the Labour Department report said. COVID-19 was cited as the reason for rising unemployment in every state that listed a cause, with widespread layoffs in hotels, food service, retail, construction and even mining reported.
The claims may have reached a “vertiginous plateau,” Gregory Daco of Oxford Economic said in an analysis, but the labour market is set for a “traumatic period” and the figures will “remain extraordinarily high in coming weeks as the economy plunges deeper into a recession.”
The damage was apparent among homebuilders, with the Census Bureau survey showing housing starts slumping last month by 22.3 percent to 1.2 million compared to February´s downwardly revised 1.6 million. Single family housing starts fell by 17.5 percent to 856,000, while permits for new construction — a sign of housing in the pipeline and a less erratic indicator — also dropped 6.8 percent.
Permits for single family homes were especially hard-hit, falling by 12 percent compared to February. The deepest falls in the housing starts were recorded in the northeastern US, parts of which — including New York and New Jersey — were hammered by the outbreak in March, and Oxford Economics warned the sector was in for a tough year.
“Housing starts are expected to fall further in the second quarter and recover only modestly in the second half of 2020, leading to a negative performance for the year overall,” they wrote in a note.
A report from the Federal Reserve Bank of Philadelphia elaborated further on the economic damage, showing manufacturing activity in the region falling below its nadir during the global financial crisis. The survey of manufacturing activity encompassing parts of the states of Pennsylvania and New Jersey and the entirety of Delaware fell to -56.6, its lowest level since July 1980. Sixty percent of firms said business activity was decreasing while the index tracking new orders fell to -70.9, its lowest-ever reading.
The data indicate a “sharp deterioration” in activity, Rubeela Farooqi of High Frequency Economics said, and shows “manufacturing is under renewed pressure from falling demand, supply chain disruptions as well as factory closures.”