American employers continue to cut jobs at rates that dwarf the pace of layoffs in past decades, even as the economy crawls forward from the coronavirus-induced recession that began last spring.
The Labor Department reported Thursday that 787,000 Americans filed for state unemployment benefits for the first time last week, a decline from the previous week’s total of 827,000. These figures, unadjusted for seasonal variations, are roughly four times the weekly tally of claims from before the pandemic.
But the totals did not reflect a fresh report from California, where officials have halted claims processing for two weeks to clear a backlog and deal with fraud. Instead, the Labor Department used the most recent weekly figure available.
With seasonal adjustments, last week’s national figure was 837,000.
Applications for Pandemic Unemployment Assistance, an emergency federal program aimed at independent contractors, gig workers and part-time employees, totaled 650,000.
As bad as the numbers look compared with the start of the year, they are much improved from early spring, when fired and furloughed workers sought out benefits by the millions each week. Still, the totals offer little indication of a strengthening labor market.
“It’s unclear how many companies can sustain themselves and retain payrolls that support incomes,” said Rubeela Farooqi, chief U.S. economist for High Frequency Economics. “A solid rebound in job growth is now looking more muted.”
Large and small companies alike continue to let workers go. Disney, whose theme parks in Florida and California have been hard hit by a shortage of visitors, said Tuesday that it would lay off 28,000 workers.
And with the end of a $600 federal weekly supplement to unemployment benefits in July, consumers have less to spend at businesses struggling to stay open, like restaurants, bars and retail stores.
Many economists said another round of federal stimulus could ease the situation, but Democrats and Republicans in Congress haven’t been able to agree on a package.
“Clearly there has been a moderation in the rate of improvement from the early stages,” said Michelle Meyer, head of U.S. economics at Bank of America. “As we get further away from the initial shock, we have less of a natural catch-up, and we face more residual damage.”
European stocks rose on Thursday and futures indicated that shares on Wall Street would gain later as investors watched developments in Washington over a new government spending plan to bolster the economy.
The S&P 500 looks set to start the month on a higher note after recording a loss for September, the first monthly decline since March.
Wall Street’s focus has been on whether Democrats and Republicans would be able to reach a deal that unleashes fresh support for small businesses, workers, state governments and the broader economy. House Democrats abruptly postponed a planned vote Wednesday evening on a $2.2 trillion stimulus plan, putting off action until Thursday to leave time for a last-ditch round of negotiations with the Trump administration to produce a deal.
But analysts at Goldman Sachs said that it was unlikely there would be any more fiscal stimulus before the November election.
The Labor Department reported Thursday that 787,000 Americans filed for state unemployment benefits for the first time last week, a decline from the previous week’s total of 827,000. The totals did not reflect a fresh report from California, where officials have halted claims processing for two weeks to clear a backlog and deal with fraud. Instead, the Labor Department used the most recent weekly figure available.
The Stoxx Europe 600 rose 0.5 percent. The benchmark index in France climbed 0.6 percent, and the benchmark in Germany was slightly higher. Oil futures fell back below $40 a barrel, reversing a small gain from earlier in the morning.
The Tokyo Stock Exchange was shut down for the entire day because of a technical glitch, which halted trading in one of the world’s largest economies. There have been outages on the exchange outages in the past, but trading had not stopped for a whole day before.
Shares in the Swedish retailer H&M rose more than 7 percent after the company said online sales were growing strongly and the company had already returned to profit in the third quarter. The group plans to close 250 stores next year.
Rolls-Royce dropped as much as 11 percent on Thursday morning after the plane engine manufacturer announced plans to raise as much as £5 billion ($6.4 billion) from shareholders, a bond sale and government-backed loans. The company said that despite efforts to conserve cash, the pandemic had led to a “sharp deterioration” in its finances and a £4 billion cash outflow this year.
Bayer fell to its lowest since March after the German maker of pharmaceutical and agriculture products said on Wednesday that profit would be hit harder than expected and it was going to make more efforts to reduce billion of euros in costs and make write downs in the billions on assets in its agricultural business.
Tens of thousands of airline workers were furloughed starting Thursday after a widely supported effort to renew federal stimulus funding for the industry failed to overcome a congressional stalemate.
American Airlines and United Airlines told employees on Wednesday night that they would proceed with more than 32,000 furloughs, though both companies said they would reverse course if lawmakers provided the funding the industry had sought.
“I am extremely sorry we have reached this outcome,” Doug Parker, American’s chief executive, said in a letter to staff. “It is not what you all deserve.”
Passenger airlines received $25 billion in payroll funding under the March stimulus law known as the CARES Act, on the condition that they refrained from broad job cuts until Oct. 1. Unions representing airline workers had garnered bipartisan support in Congress for another round of aid in recent weeks, but the effort was caught in the deadlock over a broader stimulus package, even after airline executives pleaded their case in Washington.
The pandemic’s toll on air travel and the industry has been so severe that tens of thousands of airline employees have already volunteered to take pay cuts, unpaid leave for an extended period, buyouts or early retirement.
The unemployment rate in the eurozone edged up to 8.1 percent in August from 8 percent in July, the European Union said Thursday, as government support cushioned much of the economic impact of the pandemic.
But economists fear that the jobless rate could surge when the programs expire, or employers go bankrupt or are forced to lay off workers permanently.
Germany, France and many other countries compensate workers for some of the income they lose when their employers put them on furlough or reduced hours. That has a led to relatively modest increases in the jobless rate, which was 7.2 percent in March when the pandemic hit Europe.
In the United States, which does not have a comparable program, unemployment shot from 3.5 percent in February to 14.7 percent in April, though the rate has since declined to 8.4 percent.
In theory, people on Europe’s short-work programs will get their jobs back when the economy improves. But as the pandemic lingers and surges in some places, restaurants and other small businesses may go under, while companies such as airlines may lay off workers permanently because they don’t expect revenue to rebound for several years.
“Short-time work schemes have managed to flatten the curve substantially,” Bert Colijn, a senior economist at ING Bank, said in a note. But he added that surges in the number of new infections creates “a lot of uncertainty about the growth environment.”
The head of the Federal Aviation Administration, Stephen Dickson, said on Wednesday that he was pleased with the changes that Boeing had made to its troubled 737 Max jet. Mr. Dickson, a former airline pilot, told reporters “I liked what I saw” after he flew the Max for two hours in the Seattle area, where Boeing makes and tests most of its planes. But he said that the regulator would not rush to clear the way for the plane to fly again.
The Federal Reserve on Wednesday said it would extend its ban on share buybacks by big banks as well as its cap on dividend payouts through the end of the year, a move the central bank said was an effort “to ensure that large banks maintain a high level of capital resilience” as pandemic-spurred economic uncertainty persists. The limitations apply to only the largest banks — those with more than $100 billion in total assets, which include firms like Bank of America, Citigroup and Wells Fargo.
The National Association of Theater Owners, a trade organization for cinemas in the United States and beyond, pleaded with Congress for financial help. “Absent a solution designed for their circumstances, theaters may not survive the impact of the pandemic,” it said in a letter. The letter said that “69 percent of small and midsize theater companies will be forced to file for bankruptcy or close permanently” without government help.
It’s a new month, and a new quarter. Today’s DealBook newsletter ran the numbers …
The stock market had its worst month since March. The S&P 500 was down about 4 percent in September, and at times it flirted with “correction” territory. Investors are getting jittery about the election, and several business leaders despaired at the spectacle of the first presidential debate on Tuesday.
Mergers and acquisitions picked up, particularly for big deals. The value of $5 billion-plus deals was the most on record for a third quarter, following a pandemic-induced freeze on transactions. Over all, global deal value in the first nine months of the year is down about 20 percent from the same period last year.
I.P.O.s are poised to set records. The amount raised in U.S. listings so far this year is ahead of even the heady dot-com days, with the busiest deal count for a third quarter since 2000, according to Renaissance Capital. It’s no surprise what’s fueling the boom: More than 100 SPACs have gone public so far this year, raising more than $44 billion.
Joann Taylor, a catering coordinator at a McAlister’s Deli franchise in Houston, used to work about 30 hours per week. But when the pandemic hit, her boss put her in an on-call position for deliveries only.
As a result, her hours were cut so severely — sometimes to two hours a week, or none at all — that she qualified for unemployment benefits, including $300 a week before taxes in Texas state benefits and a $600 federal supplement.
But when the $600 payments expired at the end of July, Ms. Taylor began struggling to pay her monthly bills, including $1,240 in rent, $180 for electricity, a $240 car payment and $155 for auto insurance.
Ms. Taylor, 45, is a single mother of two daughters, 6 and 14. In early September, she got a month’s worth of $300 weekly payments from Lost Wages Assistance, a short-term federal supplement to unemployment insurance, which she used to pay her September rent.
Determined to provide for her daughters, she used the time while underemployed to get a license to sell life and health insurance. Now she’s looking for an agency to take her on, hoping for steadier income.
But until then, without further aid from Congress, she’s worried about paying the rent and buying groceries for her family.
“I will have to go to every church around me and ask for help,” she said. “I will stand in food lines with the kids because I cannot leave them at home. I will apply anywhere that I can for help because there’s no way that I can allow us to be homeless.”
Until June, MacKenzie Nicholson worked for the American Cancer Society, lobbying state and federal legislators to increase funding for cancer research. She lost her job after the pandemic forced the organization to cancel events across the country, eroding its revenue.
Ms. Nicholson, 30, received roughly $5,000 in severance pay, so she did not qualify for unemployment benefits until that money ran out in August. By then, a $600 weekly federal supplement to unemployment insurance had expired, so she received only New Hampshire benefits: $384 a week after taxes.
Her husband was furloughed as a Jeep service manager in late March, but was called back in April. Even with paychecks of $1,000 a week, his income is not enough to cover their monthly expenses, including a $2,118 mortgage payment, car payments totaling $666, and student loan payments adding up to $500.
On Sept. 10, she received $1,620 from Lost Wages Assistance, a short-term federal supplement, which allowed her to pay the September bills.
To make ends meet in October, she plans to pick up shifts for DoorDash, Uber and Lyft. But with her husband back at work and their children, 3 and 7, needing supervision and help with Zoom school all day, she will have to work those shifts in the evenings.
It’s hard for her to square the anxiety over meeting basic needs with the life she had a year ago, when she and her husband had just bought their first home, and their family seemed settled and secure.
“The winter’s coming and we have oil heat, and I don’t know if we’ll be able to pay for that,” she said. “At least we have a fireplace.”
Home construction workers, whose livelihoods were on the line as the economy collapsed in the spring, are benefiting from a newly resurgent housing market, while builders of commercial and retail properties struggle.
About 40 percent of construction workers are in the residential sector, while 60 percent are in the nonresidential field, according to Ken Simonson, chief economist of the Associated General Contractors of America, a trade group.
Mr. Simonson’s group represents the nonresidential part of the business, which has been hard hit by empty office buildings and stores.
“The outlook is fairly bleak for nonresidential construction,” he said. “New residential construction is terrific, specifically single family homes.”
After plunging in the spring, employment in residential construction rose 2.1 percent from June to August, while nonresidential jobs declined 0.4 percent, the contractors’ group said. One exception to the trend is construction of distribution centers, which is being driven by the boom in e-commerce that has accompanied the pandemic.
Construction employment was 7.2 million in August, the latest month for which figures from the Bureau of Labor Statistics are available. That was a decline of 425,000 from February.
The National Association of Realtors reported Wednesday that its index of pending home sales rose 8.8 percent in August, reaching a record high, as rock-bottom mortgage rates and a desire to escape crowded cities for suburban and exurban areas fed demand.
“Even before the pandemic, we had a housing shortage and one of the factors was a shortage of skilled construction workers,” said Lawrence Yun, the trade group’s chief economist. “The residential sector is booming.”