- Data from the Labour department showed that more than 6.6 million Americans filed for unemployment benefits.
- The number came shortly after Challenger showed that job cuts increased in March to levels last seen in 2008.
- Focus now shifts to the official nonfarm payrolls numbers set to be released tomorrow at 12:30 pm GMT
US dollar index falls as jobless claims rise
The US dollar index held steady after the Department of Labour released the weekly jobless claims data. The numbers showed that more than 6.6 million Americans filed for unemployment claims in the week that ended on March 27.
US dollar holds gains after weak jobless claims data
The bleak jobless claims number was worse than the one released last week when more than 3.2 million Americans filed for insurance claims. The number was also higher than the 3.5 million claims that economists surveyed by Bloomberg were expecting. It was also the highest jobless claims number ever released.
US jobless claims rise
As I wrote yesterday, analysts at Pictet were expecting the number to come in at 6.5 million. Those at Goldman Sachs (NYSE: GS) and Citi (C) had warned that the number could be between 5.25 million and 4 million. The continuing jobless claims came in at more than 4.8 million.
These are the worst jobless claims numbers ever released by the Labour Department. At the peak of the last financial crisis, the peak claims were about 700k.
As more people stay at home, there are risks that the economy will slide into a recession. According to Nouriel Roubini, the famous economist who predicted the last recession, the situation now is worse because very few people are not working. According to the New York Times (NYSE: NYT), more than 80% of Americans are now being in a sort of a lockdown, up from 50% last week.
US job cuts increase to highest level since 2009
The numbers released today came a day after ADP found out that the economy lost more than 27k jobs in March. Most of the job cuts were from small companies that employ less than 50 people. These were offset by hiring in bigger companies.
Another bad news came today from Challenger, Gray, and Christmas. The company reported that job cuts in the US were increasing. In the report, the company said that there were more than 222k job cuts in March. This was the highest number since the financial crisis of 2008/9.
Most of the job cuts came from the entertainment and leisure industry, which lost more than 82k employees. This was followed by the automotive, services, non-profit, and industrial goods sectors. Other key sectors were transportation, real estate, and energy. In a statement, Andrew Challenger said:
“The virus has caused total whiplash for HR, hiring managers, and recruiters. The labor data for February showed a strong economy with a tight labor market. Companies were fighting for talent across industries. Now, millions of workers have filed for unemployment, companies have frozen hiring, and in many cases, cut operations or closed completely.”
Official employment data eyed
The focus on the dollar index now shifts to the Labour Department, which will release the official employment data tomorrow at 12:30 pm GMT.
Expectations are low. Economists polled by Bloomberg expect the data to show that the economy lost more than 100k jobs in March. In comparison, the US economy added more than 2 million in 2019.
They also expect the unemployment rate to have risen back to 4%. Worse, they expect wages to have dropped from 0.3% to 0.2%. These will be the worst employment numbers in the US since the last financial crisis.