The layoffs in the United States remain high, the weakness of demand persists after the re-opening of businesses


WASHINGTON (Reuters) – weak demand is forcing american employers to lay off workers, which keeps the new applications for unemployment benefits to be extraordinarily high, even if the businesses have reopened their doors, supporting the view that the job market could take years to recover from the pandemic COVID-19.

PHOTO FILE: people queue up at a career center in Kentucky in the hope of finding help for their claim of unemployment in Frankfort, Kentucky, United States, June 18, 2020. REUTERS / Bryan Woolston

A resurgence of confirmed cases of coronavirus across the country, linked to the reopening of businesses, obscures also the prospects. At the end of the month of may, approximately 29 million people received the unemployment checks.

Thursday, the weekly report of jobless claims from the Department of labor, the most recent data on the health of the economy, should not show a large enhancement, more than a month after that many companies have resumed their activities after their closure in mid-march in order to slow the spread of the respiratory disease.

Companies recruit, but eliminating jobs at roughly the same pace. The economy went into recession in February.

“Some companies have tried to maintain their workforce, waiting to see what would happen during the reopening of businesses,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania. “Even if the economy recovers, they do not see a lot of demand, and decide they don’t need as many workers. ”

The first requests for unemployment benefits in the State are likely to have amounted to $ 1.3 million seasonally adjusted data for the week ended June 20, compared to 1,508 million the previous week, according to a survey Reuters survey of economists.

The claims have decreased from a record high of 6,867 million at the end of march, but the pace of decline has slowed and they are still more than double their peak during the Great Recession of 2007-2009.

From the manufacture to the transportation, to the retail trade, leisure and hospitality, companies are restructuring themselves to adapt to a landscape rapidly changing, resulting in layoffs and bankruptcies. The governments of States and local governments, whose budgets have been reduced by the fight against the COVID-19, also eliminate jobs.

The increase of coronavirus infections in many parts of the country, including California, Texas and Florida, is likely to harm employment, because some people stay away from restaurants and other establishments for the consumer, even if the companies are not closed again.

“It looks like a bumpy ride,” said Josh Wright, chief economist at Wrightside Advisors in New York.

In a busy schedule for economic data, other reports released on Thursday are expected to show a rebound in orders for costly product in may and confirm that the u.s. economy declined at an annualized rate of 5% in the first quarter, the biggest contraction since the financial crisis, there are more than a decade.

When the production of the second quarter will be published next month, the pace of contraction may exceed 30%.


The report on initial jobless claims Thursday should also show a change modest in the roles of unemployment. The number of people receiving benefits after an initial week of aid has probably dropped to 19,968 million during the week ending June 13, compared to 20,544 million the previous week, according to the survey by Reuters.

These so-called continuing claims are reported with a lag of one week. Continuing claims have fallen to a record 24,912 million at the beginning of may, the economists attributing the protection program pay-cheque from the government, which is part of a whole fiscal history of a value of about 3000 billion dollars, providing businesses with loans which can be partially cancelled if they are used for salaries.

However, progress appears to have declined. The data on the requests for reimbursement continued to cover the week during which the government surveyed households for the unemployment rate in June.

The measurement of the rate of unemployment is biased since march by people who are incorrectly classified as “employed but absent from work”.

The Bureau of labor statistics (BLS) of the Department of labour, which establishes the employment report, is working with the census Bureau to correct this problem in future reports.

Without the problem of erroneous classification, the unemployment rate would have been 16.3% in may, a rise of 13.3 per cent and would have a peak of about 19.7% in April.

“So far, at least, companies that hire top just the companies that are laying off,” said Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania. “We will not see may not be a major decline in the unemployment rate in June. In fact, if the BLS finally fixes its problem of incorrect classification, we might actually see higher rates compared to the rates published in may. “

PHOTO FOLDER: hundreds of people queue up at a Kentucky Career Center in hopes of finding help for their claim of unemployment in Frankfort, Kentucky, United States, June 18, 2020. REUTERS / Bryan Woolston

The economists also say that the continuing claims are likely to have stagnated is because some of the people who returned to work were réembauchées part-time. This would allow them to continue receiving benefits, while continuing to be a part of the payroll of the company.

The government has expanded the eligibility for unemployment benefits to include self-employed workers and independent contractors who have been affected by the pandemic COVID-19, in particular because of the loss of employment, reduction of hours and wages.

Part-time workers accounted for two-fifths of the increase of 2.5 million jobs in may.

Report Lucia Mutikani; Editing by Andrea Ricci

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