WASHINGTON — The number of Americans seeking unemployment benefits fell slightly last week to 751,000, a still-historically high level that shows that many employers keep cutting jobs in the face of the accelerating pandemic.
A surge in viral cases and Congress’ failure so far to provide more aid for struggling individuals and businesses are threatening to deepen Americans’ economic pain. Eight months after the pandemic flattened the economy, weekly jobless claims still point to a stream of layoffs. Before the virus struck in March, the weekly figure had remained below 300,000 for more than five straight years.
Thursday’s report from the Labor Department said the number of people who are continuing to receive traditional unemployment benefits declined to 7.3 million. That figure shows that some of the unemployed are being recalled to their old jobs or are finding new ones. But it also indicates that many jobless Americans have used up their state unemployment aid — which typically expires after six months — and have transitioned to a federal extended benefits program that lasts an additional 13 weeks.
The job market has been under pressure since the virus paralyzed the economy and has regained barely half the 22 million jobs that were lost to the pandemic in early spring. The pace of rehiring has steadily weakened — from 4.8 million added jobs in June to 661,000 in September. On Friday, when the government issues the October jobs report, economists foresee a further slowdown — to 580,000 added jobs — according to a survey by the data firm FactSet.
Last week, nearly 363,000 people applied for jobless aid under a new program that extended eligibility for the first time to self-employed and gig workers, up slightly from 359,000 the previous week. That figure isn’t adjusted for seasonal trends, so it’s reported separately.
All told, the Labor Department said 21.5 million people are receiving some form of unemployment benefits, though the figure may be inflated by double-counting by states.
The financial aid package that Congress enacted in the spring included a $600-a-week federal jobless benefit and $1,200 checks that went to most adults, in addition to assistance for small businesses. All that money has run out. Without additional federal aid, millions of unemployed Americans likely will lose all their jobless benefits in coming weeks and months, probably forcing them to scale back their spending. And many small companies could go out of business.
In the meantime, new confirmed viral cases in the United States reached an all-time high of more than 86,000 a day, on average, in a sign of the worsening crisis that lies ahead for the winner of this week’s presidential election. By contrast, just two months ago, according to Johns Hopkins University, the seven-day rolling average for confirmed daily new cases was 34,000.
As temperatures fall, restaurants and bars will serve fewer customers outdoors. And many consumers may stay home to avoid infection. Dwindling business could force employers to slash more jobs during the winter.
The data firm Womply found that more businesses are shuttering in the face of a COVID resurgence and a potentially deteriorating economy: 21% of small businesses were closed as November began, it says, up from 20% in October, 19% in September and 17% in August. And sales growth is slowing at the companies that are open.
“The economy is on its own against the virus,” said AnnElizabeth Konkel, an economist at Indeed. “Accelerating cases are an ever-present threat during winter, and a virus surge means economic uncertainty for businesses. Until that uncertainty is eliminated, the labour market will struggle to return to what it used to be.”
A series of major corporations have announced layoffs recently. Last week, Exxon Mobil said it was slashing 1,900 jobs from its U.S. workforce. Chevron said it planned to cut a quarter of the employees at its recently acquired Noble Energy, with he pandemic sapping demand for fuel. Charles Schwab announced after completing its purchase of TD Ameritrade that it would cut 1,000 jobs from the combined company.
And Boeing said it would make deeper cuts to its workforce than originally planned. It has been losing money because the viral outbreak has depressed demand for new planes. Boeing expects to end the year with about 130,000 employees, down 30,000 from the start of this year — far more than the 19,000 reduction it had announced three months ago.
A pandemic-caused jobs crisis is inflicting damage elsewhere in the world, too. When the viral outbreak struck, halting most global travel, 1 million people lost jobs in Spain, for example, and the unemployment rate hit 16.3% in September. The government has supported the wages of roughly 3.4 million workers and still keeps 600,000 under its national furlough system. But experts warn that Spain needs to fix its job market, which is plagued with temporary and part-time contracts.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
