- U.S unemployment claims climb over 3 million in the recent week due to the Coronavirus crisis.
- Economist Mark Zandi expects further increase in unemployment in the upcoming weeks.
- Economists see recession to have already started in the United States.
The U.S Department of Labor announced its weekly report on unemployment claims on Thursday. The data showed the jobless claims in the U.S to have climbed over 3 million last week. A sharp increase in unemployment stemmed from the Coronavirus pandemic that pushed businesses into shut down with many of them resorting to massive layoffs. The flu-like virus, as per economists, is likely to break America’s longest employment boom.
The Labor Department revealed the seasonally adjusted initial unemployment claims to have climbed to 3283K in the week that ended on March 21st that marked the sharpest increase in over 3 decades. The figure was capped at a much lower 282K in the previous week while economists had forecast the U.S jobless claims to jump to 1648K in the recent week.
Economists Believe Recession Has Already Started In The U.S
The Labor Department’s data on Thursday is the most substantial proof that COVID-19 is sabotaging the economy with many economists already seeing recession to have started. According to analysts, the weekly unemployment claims is the most timely indicator of the labor market’s performance.
The U.S Federal Reserve has reduced rates to zero to combat the Coronavirus pandemic while an unprecedented £1.69 trillion rescue package is scheduled for voting in the U.S House of Representatives on Friday.
The U.S Labor Department stated on Thursday:
“During the week ending March 21, the increase in initial claims is due to the impacts of the COVID-19 virus. States continued to cite services industries broadly, particularly accommodation and food service. Additional industries heavily cited for the increases included the health care and social assistance, arts, entertainment and recreation, transportation and warehousing, and manufacturing industries.”
Economist Mark Zandi Forecasts Further Jump In Unemployment In The Upcoming Weeks
Chief economist Mark Zandi of Moody’s Analytics also commented on Thursday’s data and reiterated that the unemployment claims are likely to worsen in the upcoming weeks. As the health emergency continues to weigh on businesses, layoffs are being announced every day and millions of Americans are expected to file claims for unemployment benefits in the next few weeks.
The forex market responded moderately to the economic news on Thursday. EUR/USD climbed from 1.0925 to a daily high of 1.0990. The pair, however, retreated almost immediately back to 1.0965 level where it is currently exchanging hands. EUR/USD is likely to face strong resistance at around 1.10 region. On the downside, the pair has created support at 1.0890.