Five million more Americans file jobless claims as Covid-19 downturn deepens - as it happened
More than twenty million unemployment claims have been filed in the last month across America
- US initial claims hit 5.2m last week
- Another week of horrific job losses
Earlier:
5.28pm BST
Time for a recap
Another wave of grim economic news has shown that America's economy is sinking into its worst recession in decades.
Related: 'Hit by a hurricane': 22m out of work in US as coronavirus takes heavy economic toll
Related: Price of high-demand food bought online in UK rises sharply
5.13pm BST
Worryingly, America's $349bn pool of emergency loans for small businesses has run dry, at least temporarily.
The Small Business Administration (SBA) says it has tapped all the funding allotted for the Paycheck Protection Program (PPP), which lets companies borrow to keep running - and paying their workers.
"The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding. Similarly, we are unable to enroll new PPP lenders at this time."
"Small businesses are the backbone of the American economy, employing 47% of all workers. In high cost cities, the median small business has only enough cash to cover 2-3 weeks of expenses. It's critical for both parties to recognize the unprecedented stress on small business and their employees from this crisis, and pass incremental funding as an urgent priority."
4.57pm BST
Despite today's dire economic data, and the threat of further market turmoil, Europe's stock markets have closed higher.
The FTSE 100 has just closed 30 points higher at 5,628, up 0.5%, ending two days of losses.
Equity markets are higher today as Germany has become the latest European country to set out plans to gradually re-open some aspects of its economy. Certain businesses will resume trading next week, and schools will re-open next month.
Austria, Spain and Italy have all eased restrictions recently and there is a slight sense that countries have a better handle on the situation.
#coronavirus#COVID19#lockdown
Wales's First Minister says Scotland, Northern Ireland and UK Govt confirm 3 week extension on lockdown.
4.43pm BST
A leading US hedge fund has predicted that stocks could fall a lot further before this crisis is out.
Elliott Management thinks shares could fall 50% from the levels seen in February before the market mayhem began.
Billionaire Paul Singer's Elliott Management said global stocks could tumble more - ultimately losing half of their value from February's high - as the world braces for the deepest recession since the 1930s-era Great Depression, according to a letter sent to clients on Wednesday and reviewed by Reuters.
The New York-based hedge fund firm, which controls $40.4 billion in assets and whose views on markets and economics are closely watched by investors, wrote that the sharp market decline seen between late February and late March "provided a heavy bookend to a dozen years of basically nonstop positive returns in global stocks, bonds and real estate."
"Our gut tells us that a 50% or deeper decline from the February top might be the ultimate path of global stock markets," Paul Singer's Elliott Management says in an investor letter https://t.co/aJRkNwHUff
4.40pm BST
Technology stocks are outperforming the rest of Wall Street, pushing the Nasdaq index up by 1.5% today.
Netflix is having a good day, up 5% to a fresh record high
Netflix is also now bigger than Exxon Mobil pic.twitter.com/sg3c7pXUSR
Sign of the times: Netflix is now about $30 billion bigger than Exxon by market cap pic.twitter.com/m3mn4zDG0X
4.05pm BST
Heather Long of the Washington Post has spotted that America's unemployment crisis is particularly bad in some key electoral battle grounds:
NOTABLE: Some of the worst job losses have occurred in key swing states.
Michigan now has over 25% of workers unemployed
Pennsylvania over 18%
Nevada is at 18.5%
Ohio is over 15%https://t.co/0559uvGqtW
3.50pm BST
Back in the US, the number of new houses being built has suffered its biggest decline since 1984.
New housing starts shrank by over a fifth last month, the biggest drop since America was recovering from the early '80s recession
Privately-owned housing starts declined last month to an annualized rate of 1.2 million, the US Census Bureausaid Thursday.
That represents a 22% decline from the pace in February.All four geographical segments in the United States were down, led by a 43% plunge in the Northeast, which is getting hit hardest by the health crisis.
US housing starts -22.3% to 1.22mn annualized rate in March:
> 8mo low
> largest monthly decline since 1984#Housing permits more moderate decline of 6.8% to a 1.35mn
> This is only the tip of the iceberg in terms of the #COVID19
> Starts & permits will likely plunge in April pic.twitter.com/IYj8tSSW1a
3.30pm BST
Discount supermarket chain Aldi is to begin selling groceries online for the first time this week with food parcels intended for vulnerable people and those self-isolating.
The parcels, which go on sale from Friday and will cost 24.99 including home delivery, contain 22 products including tinned soup, rice and pasta. Each parcel will also include antibacterial handwash and toilet roll.
3.19pm BST
Back in the UK, Bank of England policymaker Silvana Tenreyro has warned that the UK economy will suffer an "extremely large" hit from the Covid-19 crisis.
Tenreyro told an online seminar that aggregate spending will slump, as the government's lockdown hits activity. But while some companies will see robust demand, the overall impact will be negative.
An important aspect of the economic effects of Covid-19 is that they will be highly asymmetric. Firms that relied on social interaction or non-essential visits have had to close down temporarily, while others that can offer services remotely or by delivery have been less directly affected. Recent analyses have highlighted the different ways spending might be affected in sectors that can remain open.
On the one hand, firms that offer substitute products will see demand increase: for example, purchases of food from supermarkets instead of cafes and restaurants; or streaming of films or television in place of cinema trips or live entertainment. But on the other hand, all sectors will suffer from falls in demand owing to lower income and increased uncertainty elsewhere in the economy. In my view, the latter effect is likely to dominate.
A crucial aspect is that much of its economic impact should ultimately prove temporary: many businesses that were viable and jobs that were needed before Covid-19 will be so again after it passes.
A key task for policy in the interim is to try to minimise those business failures and reduce job losses that would otherwise lead to persistent scarring effects. By doing so we want to prevent any lasting reduction in the supply capacity of the economy and help offset any persistent negative effects on demand.
Silvana Tenreyro examines the impact of Covid-19 on the UK economy. And she explains what we're doing to keep prices stable. https://t.co/6bogSrLpzu pic.twitter.com/4ArBjJG4aV
2.38pm BST
Wall Street has dipped at the start of trading, following this latest surge in US unemployment.
The Dow Jones industrial average has dropped by 126 points, or 0.5%, to 23,378.
2.37pm BST
Neil Birrell, Chief Investment Officer at Premier Miton:
"No surprise, the US jobless claims number is awful but around expectations. However, the number itself probably won't affect markets that much. They are becoming immune. It's all about how much longer this goes on for and the irreparable damage that is done. It does mean that the number of jobs created in the economy since 2009 has effectively been lost in the last few weeks; that's the scale of this thing."
"The magnitude of this shock to employment is unparalleled in US history. The longevity of the downturn is the key question at this point. My concern is that investors are overly optimistic as we still have no proven therapeutic intervention for COVID-19 and we still are not testing on a sufficient scale to identify and quarantine asymptomatic infections. Until we can treat the illness effectively, it is difficult to see how we return to business as usual."
With the additional +5.2 million initial claims reported today, the US has seen 21 million cumulative initial claims since March 14 over and above what we might have expected. That's almost 15% of February employment.
The disruption is everywhere, but most acute in MI and RI. /1 pic.twitter.com/xroIK95A1M
2.16pm BST
US initial jobless claims 5.245m says @USDOL down from last week's 6.615m but still mammoth number; same wk in 2019 saw claims of 203k; see below for extreme hockey stick graph pic.twitter.com/mIgTBgfkmg
2.11pm BST
Last week's jobless claims were filed in the run-up to Easter. And unfortunately, that could mean that some potential claims weren't filed because of the Good Friday break, points out Genie Research:
"The only good thing about five mn people losing their jobs, is that it's less than six mn." @graemewearden Figs are a 4-day week: many states & even more locales close on Good Friday. Pro rata, 51/4mn in 4 days = 6mn in 5 days, i.e. the same throughput limit of the prior 2 weeks.
2.06pm BST
Investment banker Dan Alpert of Westwood Capital tweets that most of the 22 million jobs lost in the last month have been 'blue collar' roles (people who produce goods and services, but don't manage others)
'White collar' workers are next, he warns:
22,034,000 people have filed for unemployment claims. Assuming that that vast majority of them are production and non-supervisory workers (a very fair assumption) that would mean a loss of nearly 21% of P&NS jobs in four weeks. Beyond unprecedented.
Do not place much reliance on the fact that this week's initial unemployment claims number was lower than those of the last two weeks. In the most affected states and services sectors we are literally running out of jobs to terminate.
Outside of those front-line services sectors, we are looking at the crisis digging deeper into the goods producing sectors. Next week, if funds are still not moving to employers, will see a spike in claims by white-collar service employees.
2.01pm BST
Investor Jim Bianco has crunched the unemployment numbers, and shown that more jobs have been lost in the last month than were created in the the last 10 years.
Total US Jobs
Jun 09 = 131.009m (end of GFC)
Feb 20 = 152.487m
Increase = 21.749m
Recent initial claims
3/20/20 = 3.283m
3/27/20 = 6.648m
4/3/20 = 6.606m
4/10/20 = 5.245m
Total = 21.782m
All the jobs since the end of the GFC (Jun 09) have been erased!
1.57pm BST
Astonishingly, the full scale of the job losses across America could be even worse than the official jobless data suggests.
That's because some people aren't eligible to file jobless claims -- and others may still be struggling to get their applications reviewed.
"While today's jobless numbers are down on last week, they still mean that all the job gains since the financial crisis have been erased in the space of just four weeks. What's more, with many workers, including those in the gig economy, not included in these numbers, labour market pains may be even worse than these numbers suggest.
"However, concerns for the second half of the year may be underestimated. Although governments are looking to lift lockdowns, the re-opening of economies will be only gradual, compounding financial strains for businesses and households, supressing demand and suggesting a slower economic recovery."
1.52pm BST
The only good thing about five million people losing their jobs, is that it's less than six million.
So with one million fewer jobless claims filed in the last week, Robert Alster of Close Brothers Asset Management suspects the peak may be behind us.
"The question on the lips of both policymakers, and those who've lost their jobs, is how long will it take for companies to start hiring again once the country 'reopens' for business? In truth, we don't know - but many will be hoping President Trump is right in his projection that, once the lockdown is lifted, America's unemployed find work considerably more quickly than in previous recessions.
"Of course it is not inconceivable that companies choose to hire more conservatively; either due to the possibility of further lockdowns or as a way to restructure and emerge from this crisis in better shape."
1.50pm BST
Today's jobless claims figures imply that America's unemployment rate has now surged to 16% - worse than during the financial crisis.
Using the historic statistical relationship between initial claims and continuing claims and the unemployment rate (they don't always map 1:1) , today's read implies a real-time unemployment rate of ~16%. /2 pic.twitter.com/ud33ijSEii
1.43pm BST
Here's our US business editor Dominic Rushe on today's grim US jobless numbers:
More than 22 million American have lost their jobs in the last four weeks as the coronavirus pandemic has swept across the US, according to government figures.
The US labor department announced on Thursday that another 5.24 million people filed for unemployment benefits last week, making a total of 22.2 million since 14 March when nationwide stay at home orders led to an unprecedented wave of layoffs across the country.
Related: 'Hit by a hurricane': 22m out of work in US as coronavirus takes heavy economic toll
1.41pm BST
This is the fourth week running in which millions of Americans have filed new jobless claims.
Before March, the record initial jobless claims total was below 700,000, and the idea of 22 million people losing their jobs in a month would have been unimaginable.
BREAKING! US initial jobless claims rose 5.25 million in the week until April 11. Cumulative job losses during the four weeks now at a staggering 22 million. pic.twitter.com/uEQg7HMwhI
US initial jobless claims +5.2m last week to bring 4 week total above 20m. That's all the job created in the past 10yrs. Lost in a month. .........
I'm old enough to remember a time (late March) when 3.3 million initial claims was a staggeringly high figure.
1.35pm BST
Newsflash: More than five million Americans signed up for unemployment benefit last week, as the US economy continues to slump.
The initial jobless claims total, just released, came in at 5.25m.
#UnitedStates #IJC Initial Jobless Claims at 5245K https://t.co/7p2FYAmZ3d pic.twitter.com/lCBgs6gLNt
1.27pm BST
The row between easyJet's founder and its management has deepened further today.
Sir Stelios Haji-Ioannou is now demanding that the chairman and CEO step down, for failing to cancel a plane order with Airbus worth 4.5bn.
Now I will call for the removal of...
The CEO Johan Lundgren for sending 1.5 bn of our money to Airbus whilst running an "aircraft parking lot" for 9 months.
Flying half empty planes will be heavily loss making. That 40m per week of cash burn is before the payments to Airbus....
1.05pm BST
US Initial Jobless claims coming up at 1330 BST.
Expected increase of 5.105M v 6.06M previously.
Fair warning - predictions have been all over the place this week.#DOW 23547 +0.19%#SPX 2791 +0.24%#NASDAQ 8657 +0.74%#RUSSELL 1184 -0.10%#FANG 3410 +0.28%
12.38pm BST
Wall Street bank Morgan Stanley has posted a 27% drop in earnings for the last quarter.
Earnings per share dropped to $1.01, from $1.39 a year ago. It warned that falling asset prices, lower interest rates, wider credit spreads and market volatility has all hurt its performance.
"Over the past two months, we have witnessed more market volatility, uncertainty and anxiety as a result of the devastating COVID-19 than at any time since the financial crisis. While it's too early to predict how this will unfold, Morgan Stanley navigated the quarter well given the conditions, and our results bear testament to the strength of our balanced business model.
Our investments in technology and infrastructure enabled us to continue to serve our clients around the globe with more than 90% of our employees working from home. I am proud of the dedication and professionalism of our employees in the face of these obstacles."
12.28pm BST
Tomorrow (at around 3am GMT) China will release its GDP figures for the last quarter - and it's likely to be the worst on record:
In about 15 hours, China will likely publish the country's worst GDP report since the economy opened up in the 1970s. Estimates:
Q/Q:
High -5%
Median -12%
Low -20% pic.twitter.com/n8QKKRVteD
12.17pm BST
Asset management giant BlackRock has been hit by the coronavirus crisis, and the market mayhem.
It has reported a 23% drop in profits in the last quarter, as customers withdrew money from active management and fund tracker services in favour of holding cash.
"Until we have adequate testing, rapid testing it is very hard for me to see how we are going to reboot in the next 30 days," says @BlackRock CEO Larry Fink. pic.twitter.com/xwysamibTa
12.05pm BST
Housebuilder Barratt is one of the many UK firms badly hit by the lockdown.
It said this morning that it is now furloughing around 85% of its employees, meaning the government will pick up 80% of their wages.
We will pay furloughed employees their normal pay while they are furloughed until at least the end of May 2020.
11.27am BST
Back in the City, the early rally is petering out -- with the FTSE 100 now only up 9 points at 5607 points, having fallen sharply yesterday.
It ended last week at 5842 points, after a strong rally, but hasn't managed to reclaim 6,000 points (which it slumped through on Crash Monday in early March).
In the long run, share prices and company valuations are dictated by profits and cash flow, but sentiment and narrative can dominate in the short term. And one way that investors can judge sentiment is to look at a price chart, as that is the perfect summary of market opinion at any one given time.
In that context, the current chart of the FTSE 100 will be as instructive, especially by technical analysts, who prefer to use charts as a key basis for their trades, rather than fundamental analysts who go by long-term profit and cash flow analysis when it comes to their investments.
11.02am BST
Nearly 2,000 pubs, breweries and cider makers are now offering takeaway or delivery services to help keep themselves afloat during the coronavirus lockdown, according to the Campaign for Real Ale.
The industry group has a directory of these initiatives as part of its Pulling Together, campaign where it's also asking customers to join local "pay it forward" schemes, paying for drinks, rooms or events now to be redeemed in future.
We're highlighting some pubs & breweries going the extra mile during lockdown #PullingTogether@chestnutgroupUK offer delivery/collection & online Q&As with their chefs! Plus 2 locations have opened as shops to help people access pantry staples.
https://t.co/eRQlABhrMd pic.twitter.com/3GNwQbpKfo
10.26am BST
The coronavirus pandemic has pushed prices in the online shops up in the last month, today's survey of the UK economy shows.
Prices in the ONS's basket of 'high demand products', which includes food, cough medicines and cleaning products, have surged by 4.4% in the last four weeks, since lockdown measures began.
Prices for the HDP basket increased by 1.8% from 30 March to 5 April (week 3) to 6 April to 12 April (week 4) with prices for all long-life food items decreasing by 1.5% and all household and hygiene items increasing by 1.1%.
At a more detailed level, prices for pet food and rice rose by 8.4% and 5.8% respectively, while prices of pasta sauce fell by 4.5% (note that the size of the sample means that sometimes single retailers can contribute to substantial movements at the item level).
With the new UK Pandemic inflation measure showing inflation of 4.4% in one month below are the economists who assured us this could not happen pic.twitter.com/gcQWtrTotQ
10.12am BST
Many UK firms have reported (unsurprisingly) that their turnover had been hit by the lockdown (this excludes firms who have stopped work altogether!).
However, roughly a third say it's business as usual.
10.03am BST
A quarter of UK firms have temporarily closed or paused trading due to the coronavirus, as the economy shrinks.
Many of the 75% firms who are still trading have also furloughed some staff, as they try to ride out the crisis.
9.40am BST
Unemployment in the UK is also rising sharply...and a new report shows that it could hit 15%.
The Resolution Foundation have calculated that two million people would lose their jobs if the Covid-19 lockdown lasts three months. But if it is extended to six months, then nearly five million jobs would be lost:
Given huge uncertainties about the duration of the crisis, the Government must prepare for higher unemployment. A three-month lockdown could see it rise to almost 2 million (5.4%). But under a six-month scenario it could rise to almost 5 million (14.1%). https://t.co/dNRwYzlc3V pic.twitter.com/o4gz1TbfVg
The number of new Universal Credit claims has reportedly hit 1.4 million over the past month. That's unprecedented - and well beyond anything witnessed during the financial crisis - though encouraging that the pace of the increase is starting to slow. pic.twitter.com/5NXs2CLKJ2
9.39am BST
The Covid-19 pandemic has helped saved Barclays chief executive Jes Staley from a potentially embarrassing vote against his re-election at the bank's upcoming AGM on 7 May.
"We continue to believe that Mr. Staley has not demonstrated the level of judgement befitting a director or senior executive of the company.
However, as a result of engagement with Barclays and in recognition of the complexity of the management situation presented during the COVID-19 pandemic, we will now, with great reluctance, only withhold our vote for Mr. Staley's reappointment at the 2020 AGM, rather than vote against him."
8.51am BST
Bloomberg fears that today's US jobless figures will show that America is heading towards a situation where one in five people are out of work.
That would be much worse than after the 2008 financial crisis - and the worse since the Great Depression.
What started as the worst-case scenario for U.S. unemployment is quickly becoming reality. Some economists now see the jobless rate surging to 20% as soon as this month -- and there's no guarantee it would stop there.
About 5.5 million people are estimated to have filed for unemployment last week, in data due out Thursday. That would push the four-week total above 22 million, roughly one-in-eight of the workforce -- essentially wiping out all the job gains since the last recession.
What started as the worst-case scenario for U.S. unemployment is quickly becoming reality
from 3.5% unemployment to 20% in weeks- an economic catastrophe
think of the misery and despair of a 20% jobless rate for the poorest Americans
https://t.co/1uYqAUfqwf via @markets
8.46am BST
Informa, the world's biggest events company, is seeking to raise up to 1bn from investors to shore up its finances after being forced to postpone or cancel almost 500 events due to the coronavirus.
The FTSE 100 company has announced a range of cost savings measures to weather the global pandemic including scrapping the dividend, and opening talks with lenders over a debt covenant waiver. Staff salaries have been frozen and top executives are taking pay cuts.
"We are working with local governments and authorities and venue owners to provide certified levels of biosecurity, enhanced hygiene, electronic registration, mobile data screening, density management and other relevant on-site checks and facility upgrades".
8.37am BST
Despite the looming jump in US jobless claims, all the European stock markets are higher this morning.
Over the last three weeks where we've seen a stunning 16.8 million people file, the S&P 500 has been up +6.24%, +2.28%, +3.41% in each of these sessions.
For the record an extra 5.5 million are expected today. As our economists have detailed we are on track for a 17% unemployment rate in the US in April, which would be a new post-WWII high.
8.25am BST
London's stock market has opened higher, after yesterday's 3.3% drop.
The FTSE is up 25 points, or 0.5%, led by travel stocks such as EasyJet (+7%), cruise operator Carnival (+5.6%) and British Airways owner IAG (+5%).
8.13am BST
Pest control firm Rentokil says it has retrained thousands of staff to handle the new demand for cleaning services.
It told the City this morning:
In addition to our existing 1,000 Specialist Hygiene expert technicians, we have, in just over three weeks, re-trained a further 7,000 colleagues to perform disinfection and deep clean services.
While the impact of the COVID-19 crisis remains highly uncertain, we are expecting the impact in Q2 will be greater than in the last two weeks of March as more of our countries are impacted by lockdowns.
8.01am BST
Overnight, the IMF has added to the gloom by predicting that Asia-Pacific economic growth this year will grind to a halt, for the first time in 60 years.
In a new report, the Fund predicted "unprecedented" damage on the region's service sector and major export destinations, meaning no economic growth this year.
"It is tough as it is. Let's not make it any tougher." IMF managing director (and former European commissioner) Kristalina Georgieva tells @BBCNews UK and EU should extend Brexit transition period.
7.50am BST
Today's jobless report could show that America's unemployment rate has spiked to around 15%, Marketwatch estimates:
Some 5 million Americans likely applied for jobless benefits for the third week in a row in mid-April as the coronavirus outbreak took an even bigger bite out of the U.S. economy, pushing the unemployment rate to around 15% unofficially.
Nearly 17 million people have already filed new jobless claims since a wave of state-ordered lockdowns starting in mid-March forced most businesses to close or operate with skeleton staff.
Jobless claims might top 5 million for third straight week, push unemployment to 15% $SPY $SPX $QQQ $TQQQ $DIA $DJIA https://t.co/43Y4SwXoTW pic.twitter.com/ONO9yS54iT
7.35am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
After some horrific data from America yesterday, investors are bracing themselves for another dreadful rise in US unemployment today.
Another busy day on the economic front for traders. We have the weekly horror show - also known as the US Initial jobless claims data that for the week ended April 11. The figure is likely to come in at another 5.105 million, compared with 6.606 million the previous week. pic.twitter.com/8s3pBwUdho
Forecasts for today's US initial unemployment claims have a range of 2m to 8m. pic.twitter.com/jGwXj0bkZX
Today's data highlight is last week's US initial jobless claims report, expected to print 5.5mln
This would equate to ~21mln people claiming unemployment in the last 4wks; or in other words, the last decade's worth of jobs gains being entirely wiped out in a month
Related: Oasis and Warehouse fall into administration; US economy suffers in lockdown - as it happened
Related: UK government has no exit plan for Covid-19 lockdown, say sources
Heads up:
- UK COBRA meeting at 1530BST
- Extension to lockdown is inevitable
- Suggested May 7th extension
- Could have a "flextension" (early curtailment if backed by scientific advice)
- Exit strategy unlikely until Boris returns; could involve "segmentation"
Any recovery in risk sentiment depends on how quickly economies can reopen without risking overloading their healthcare systems and, most of all, not risking any chance of a secondary spread.
The risk of escalating economic damage is putting enormous stress governments under immense pressure to relax social-distancing measures sooner, rather than later.
Continue reading...