Category: Business

Coronavirus: Colorado unemployment rate soars to 11.3% in April

Colorado’s unemployment rate shot up to 11.3% in April and employers in the state shed an estimated 323,500 jobs last month due to the pandemic and related closures, the Colorado Department of Labor and Employment reported Friday.

The number of unemployed workers in the state rose by 183,800 last month to 347,800, pushing the unemployment rate up from a revised 5.2% in March. It was a historically low 2.5% in February, with around 80,000 unemployed workers.

Colorado’s unemployment rate has hit the highest level in a series that goes back to 1976 and surpassed the high of 8.9% reached during the fall of 2010 in the aftermath of the Great Recession.

As bad as that increase is, Colorado, remains below the 14.7% U.S. unemployment rate, an all-time high in records going back to 1948. It also remains on the low end among states. Nevada had the highest unemployment rate in April at 28.2%, followed by Michigan at 22.7% and Hawaii at 22.3%, according to the U.S. Bureau of Labor Statistics.

Although more than 476,000 people have filed for unemployment benefits in Colorado since mid-March, they represent about 13.3% of the number of employed in February, which was the fourth-lowest share of any state. In states like Georgia and Kentucky, about four in 10 of the workers employed in February have sought assistance.

There could also be some confusion among furloughed workers about their employment status, reducing the number of unemployed. Some people on furlough may still view themselves as employed, even though technically they aren’t putting in any hours and should be counted as unemployed.

The household survey estimates 67,400 workers last month took themselves completely out of the labor market, pushing the state’s labor force down to 3,069,200. The number of people reporting themselves as employed, which also captures the self-employed, decreased by 251,200 to 2,721,300.

The number of nonfarm payroll jobs in Colorado declined by 323,500 from March to April, leaving the state with 2,473,400 jobs, according to a separate survey of business establishments. Private-sector employers cut 311,400 jobs, while the public sector lost 12,100 jobs.

March payroll losses were also revised higher, from 3,900 in the initial report to 16,500 in Friday’s report.

Leisure and hospitality suffered the largest number of job losses between March and April on a seasonally-adjusted basis at 148,100, not unexpected given the closure of so many hotels and restaurants.

Educational and health services were down 43,800 jobs, which reflects the closure of medical offices and schools. Trade, transportation and utilities were down 41,800, capturing the closure of retail stores and reductions in airlines and shuttle services. Professional and business services, which are amenable to remote working, were down 28,500. Other services, a category that includes hairstylists at tattoo parlors, was down 19,800 jobs. Construction employment fell by 12,700.

Only the information sector was able to avoid significant job losses last month, staying flat.

Pitkin County had the highest unemployment rate in the state at 23.1%, followed by Gilpin County at 23%. San Miguel, Summit and Eagle counties were all above 20% unemployment. Several counties on the Eastern Plains remained below 5%.

Grand Junction registered the highest unemployment rate among metro areas at 12.6%, followed by Colorado Springs at 12.3%. Metro Denver’s unemployment rate came in at 12.1% Boulder and Greeley had the lowest metro unemployment rates at 9.7% and 9.8%.

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Trump arrives in Michigan to visit Ford plant amid political tensions

YPSILANTI, Mich. (Reuters) – President Donald Trump traveled on Thursday to the crucial U.S. election battleground state of Michigan to visit a Ford Motor Co (F.N) plant amid hostility with its Democratic governor over how quickly to reopen its economy during the coronavirus pandemic.

Trump, a Republican seeking re-election on Nov. 3, has urged states to loosen coronavirus-related restrictions so the battered U.S. economy can recover even as public health experts warn that premature relaxation of restrictions could lead to a second wave of infections.

Michigan Governor Gretchen Whitmer, seen as a potential vice presidential running mate for presumptive Democratic presidential nominee Joe Biden, is facing a backlash from some critics against her stay-at-home orders in a state hit hard by the last recession. Trump has encouraged anti-lockdown protests against Whitmer held in Michigan’s capital.

Trump arrived in the city of Ypsilanti to tour a Ford plant that has been recast to produce ventilators and personal protective equipment and to discuss vulnerable populations hit by the virus in a meeting with African-American leaders.

It is not clear if Trump, who has said he is taking a drug not proven for the coronavirus after two White House staffers tested positive in recent weeks, will wear a protective face mask. He has declined to wear one on previous factory tours despite guidelines for employees to do so.

When asked by reporters before leaving the White House if he planned to don a face covering, Trump said, “I don’t know. We’re going to look at it. A lot of people have asked me that question.”

On Tuesday, Ford reiterated its policy that all visitors must wear masks but did not say if it would require Trump to comply.

Trump on Wednesday threatened to withhold federal funding from Michigan over its plan for expanded mail-in voting, saying without offering evidence that the practice could lead to voter fraud – though he later appeared to back off the threat.

Whitmer told a news conference she spoke with Trump on Wednesday and he pledged federal support for flood recovery, as rising floodwaters have caused more trouble in Michigan, displacing thousands of residents near the city of Midland.

“I made the case that, you know, we all have to be on the same page here. We’ve got to stop demonizing one another and really focus on the fact that the common enemy is the virus. And now it’s a natural disaster,” Whitmer told CBS News, describing her conversation with Trump.

Regarding Trump’s funding threat, Whitmer said, “Threatening to take money away from a state that is hurting as bad as we are right now is just scary, and I think something that is unacceptable.”

Biden also criticized Trump, saying in a statement, “In the wake of disaster, Donald Trump once again showed us who he is – threatening to pull federal funding and encouraging division.”

Whitmer on Thursday moved to further reopen Michigan’s economy through a series of executive orders.

Trump and Ford have been at odds over its decision last year to back a deal with California for stricter vehicle fuel economy standards than his administration had proposed. Trump first sparred with Ford during the 2016 campaign over the automaker’s investments in Mexico and had vowed to slap hefty tariffs taxes on its vehicles made in Mexico.

Trump won in Michigan in the 2016 election, the first Republican to do since 1988. Trump’s handful of trips out of Washington since the pandemic went into full force have focused on election battleground states such as Arizona and Pennsylvania.

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The slow reopen: Retail visits edge up, broader economic measures still unmoved

WASHINGTON (Reuters) – The U.S. continued its cautious reemergence from a coronavirus-linked shutdown over the past week, with measures of retail foot traffic slowly increasing but broader indexes of economic activity still stalled.

Data from cellphone location firms Unacast and SafeGraph through last weekend both showed a continued slow rise in visits to retail stores. Data on around 55,000 small businesses from time management firm Homebase showed a few more firms open and more workers on the job.

The latest numbers are in line with both the gradual lifting of coronavirus-related restrictions across the country, and what many analysts expect to be a measured response among households and entrepreneurs until it is clear the virus is controlled.

In some cases, businesses are being allowed to open, but with capacity limits or other regulations to keep the virus in check.

A handful of major retailers have said sales recently have been helped by government emergency relief payments to U.S. households and those who have lost work.

Walmart Inc (WMT.N) executives said on a conference call on Tuesday that stimulus checks have helped deliver a good start to the second quarter, but they did not expect spending to continue at the same pace.

Broader real-time measures of the economy showed little evidence yet of a macroeconomic rebound.

Another 2.4 million people filed for unemployment benefits, though the number dropped from last week.

Consumer and industrial activity measures from Goldman Sachs were unchanged. A New York Fed index tracking growth in gross domestic fell slightly. An Atlanta Fed rolling estimate of current-quarter gross domestic product remained at what’s hoped to be its bottom, showing an annualized drop of more than 40%.

Any good news remained narrowly focused. Unacast data showed foot traffic among home improvement stores recently crept above 2019 levels, and pet stores were attracting more visitors.

Estimated activity moved up faster in the midwest and south – Wyoming and South Dakota saw retail traffic above 2019 levels recently — while coastal states, some still under relatively tight restrictions, remained far below last year.

For more on the real time data referenced here, see:

Unacast here here Safegraph www.safegraph.com/dashboard, NYFed here ATLFed here

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Coronavirus: Clarks to lose 900 jobs under shoe retailer’s resizing

Clarks, the 195-year-old UK shoe retailer, says it is to lose 900 jobs as the company adapts to the challenges posed by the coronavirus crisis.

It said an overhaul of the business, first revealed by Sky News in April that is understood to include the permanent closure of some unprofitable stores, was to cut the number of office roles across the business.

It announced the move after its 345 sites were shuttered under the UK’s COVID-19 lockdown – with store assistants furloughed.

Clarks announced 160 redundancies globally, with 108 of those positions going at its headquarters in Somerset.

It said roughly 700 more would be lost over the next 18 months but the losses would be partially offset by 200 new roles under its plans, which include a continuing review over its funding options.

The firm, owned by descendants of its founders Cyrus and James Clark, had already been struggling before the COVID-19 pandemic as a slump in consumer confidence took its toll on the high street at the same time as stores faced surging costs.

Chief executive Giorgio Presca said: “To ignite our emotional connection with consumers, we have organised Clarks’ brand portfolio across three distinct business units that each represent a unique segment of the shoe market, Clarks Originals, Clarks Collection and Cloudsteppers by Clarks.

“This is helping us move fast to get ahead of the changes in the ways that our consumers live their lives, so that we are there for them every step of the way.

“We are a business that walks its own path, and we are evolving to put our brand and consumers at the heart of everything we do.

“This will ensure that our organisation is made to last, empowering our people to contribute to a great future for the company.”

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Macy's forecasts $1 billion quarterly loss due to lockdowns

(Reuters) – Macy’s Inc (M.N) forecast a quarterly operating loss of up to $1.11 billion on Thursday, as the retailer was forced to shut stores due to lockdowns implemented to curb the spread of the coronavirus.

The department store chain said it expects to post an operating loss of between $905 million and $1.11 billion. It also forecast first-quarter sales in the range of $3 billion to $3.03 billion, down from $5.50 billion a year earlier.

Macy’s had earlier this month said it would report its first-quarter earnings on July 1 as significant business disruptions due to the pandemic had led to delays in preparing its financial statement.

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Fed debates longer-term crisis-fighting plan, minutes show

(Reuters) – Federal Reserve policymakers, still working to fully roll out a multi-trillion-dollar effort to shore up financial markets and an economy cratered by the coronavirus pandemic, last month dove into a new debate: how best to support the economy during a recovery they now agree could be slower and more fraught than initially thought.

Among ideas U.S. central bankers discussed at April’s policy-setting meeting, according to minutes released Wednesday: more detailed guidance for the path of short-term interest rates, and capping long-term interest rates.

The Fed used the former in the last crisis; the latter would be a first for the Fed.

There was no discussion of negative interest rates, a controversial approach to policy supported by U.S. President Donald Trump and in use in Europe and Japan, but seen by U.S. central bankers as risky and ineffective.

With tens of millions of Americans without work in an economy expected to shrink at its fastest rate ever amid widespread business shutdowns to limit the virus’ spread, the Fed has embarked on an all-out effort to calm markets, forestall mass bankruptcies, and set the stage for a faster recovery.

It has slashed interest rates to near zero, bought trillions of dollars of bonds, and initiated a raft of lending programs, including one for medium-sized businesses which it hopes to launch later this month.

At their April 28-29 meeting, policymakers re-upped a pledge to keep interest rates near zero until they are confident the U.S. economy is on track to recovery, but they also were sharply focused on continuing to deliver support to a nation that some worried could experience a “protracted period of severely reduced economic activity,” especially if new waves of infection emerged.

“While participants agreed that the current stance of monetary policy remained appropriate, they noted that the Committee could, at upcoming meetings, further clarify its intentions with respect to its future monetary policy decisions,” according to the minutes, released Wednesday with the usual three-week lag.

Some participants called for more precise forward guidance for the path of interest rates, like tying any change to rates to achieving specific economic milestones on unemployment or inflation, or to specific dates, an approach the Fed used during the last crisis.

Other possibilities discussed included giving guidance on bond purchases, the minutes showed, and using Treasury purchases to cap long-term borrowing costs, an approach employed by some other global central banks.

Completing a monetary policy framework review launched last year, several policymakers thought, could also help clarify the Fed’s policy intentions.

“Fed officials remain concerned the pandemic could have more long-lasting effects,” said Paul Ashworth, chief U.S. economist for Capital Economics.

Participants overall agreed that their recent actions had been “essential in helping reduce downside risks to the economic outlook,” the minutes showed. They also repeated calls for further fiscal support, which so far has amounted to nearly $3 trillion even as lawmakers continue to debate the size and scope of a further rescue package.

But with a number of Fed policymakers seeing “a substantial likelihood of additional waves of outbreak in the near or medium term,” the minutes suggested central bankers may be reaching for better tools to navigate what could be a rocky recovery.

More than 36 million U.S. workers have filed unemployment insurance claims since mid-March when states began putting stay-at-home orders in place. Economists expect the unemployment rate to approach or surpass the 25% record set during the Great Depression. Forecasters say they expect the U.S. economy to shrink by as much as half this quarter, on an annual basis.

States are now easing restrictions, raising the hope of a gradual return to economic growth in the third and fourth quarters, but also the risk of new infections and more death.

More than 90,000 Americans have died of the highly contagious respiratory illness the virus causes, with daily deaths averaging 1,600 a day this month, according to Reuters data.

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Wall Street climbs as investors hold out for recovery; Nasdaq at 3-month high

(Reuters) – Wall Street’s main indexes surged and the Nasdaq hit a three-month high on Wednesday, as investors clung to hopes of a recovery from a coronavirus-fueled slump amid signs of more stimulus for ailing sectors.

The tech-heavy index, now about 5% below its all-time high hit in February, boosted by Facebook Inc and Amazon.com Inc, which were trading at record levels, as well as Apple Inc.

The S&P 500 was about 12% below its all-time peak and the Dow Jones index was short by 17%.

The three indexes have rallied more than 30% from March lows on unprecedented stimulus, but gains have been capped this month as traders digest mixed headlines on progress in developing a coronavirus vaccine.

The S&P 500 tumbled 1% in the final hour of Tuesday’s session after a report raised doubts about positive results from Moderna Inc’s early-stage trial for a COVID-19 vaccine.

“We don’t expect very big gains from here, but we don’t expect a downward trend either,” said Simona Gambarini, markets economist at Capital Economics in London.

“As the lockdowns are eased and the coronavirus epidemic is brought under control in more and more countries, some recovery in the economy is already factored into the equity prices.”

U.S. Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell said on Tuesday the government and the central bank were considering more steps to ensure the worst-hit areas of the economy received adequate support.

All eyes are now on the minutes from the Fed’s latest policy meeting expected at 2 p.m. ET or 1800 GMT.

At 10:02 a.m. ET, the Dow Jones Industrial Average was up 347.25 points, or 1.43%, at 24,554.11, the S&P 500 was up 47.12 points, or 1.61%, at 2,970.06. The Nasdaq Composite was up 168.87 points, or 1.84%, at 9,353.97.

Gains were broad-based with the cyclical sectors including industrials, energy and materials posting their biggest percentage gains on hopes of a pick-up in demand.

Home improvement chain Lowe’s Cos Inc rose 1.8% after posting higher quarterly same-store sales.

Analog Devices Inc gained 7.3% after the chipmaker forecast third-quarter profit ahead of expectations.

Target Corp slipped 0.7% after the big box retailer reported a 64% plunge in quarterly profit, pummeled by costs to tackle the coronavirus outbreak.

S&P 1500 airlines index gained about 4.5% as Delta Air Lines Inc chief executive officer said he was confident travel will return in the next 12 to 18 months.

Advancing issues outnumbered decliners by a 7.11-to-1 ratio on the NYSE and by a 4.45-to-1 ratio on the Nasdaq.

The S&P index recorded 11 new 52-week highs and no new lows, while the Nasdaq recorded 49 new highs and six new lows.

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Stocks adrift as vaccine rally falters

LONDON/SINGAPORE (Reuters) – European stocks slipped lower on Wednesday and gold gained as a sceptical press report undermined some hopes for a COVID-19 vaccine and concern about obstacles to a recovery from the pandemic returned.

Italian bonds sustained their multi-week lows, continuing to gain from a Franco-German plan for a 500 billion-euro coronavirus recovery fund, ignoring a hawkish counter-proposal in the works.

Europe’s STOXX 600 index was 1.6% lower. The blue-chip FTSE 100 was down 0.4% as Rolls-Royce Holdings Plc shed 0.8% after it said it would cut 9,000 jobs and might close some of its factories.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.1%. Its world stock index was 0.1% lower after reaching its highest level since March 9 on Tuesday.

Wall Street ended Tuesday lower after medical news website STAT cast doubt on a Moderna Inc COVID-19 vaccine trial. The report said the trial results, which had rallied global stocks this week, lacked detail.

“With markets being very narrative driven, this was sufficient to see European equities pick up where Wall Street left off and head lower,” said James Athey, investment director, Aberdeen Standard Investments.”

Two-thirds of 223 fund managers surveyed by Bank of America reckon recent gains are a bear-market rally.

S&P 500 futures were last up 0.4%. Oil was steady and gold rose to $1,750.93 per ounce.

Italy’s 10-year bond yield was holding near five-and-a-half-week lows hit following the recovery fund announcement. The gap with Germany’s 10-year yield was at 211 basis points, less than 10 bps higher than Tuesday’s five-week lows.

The euro edged up 0.18% to $1.0945, near a two-week peak of $1.09755 reached on Tuesday, supported by the Franco-German proposal for the common fund.

Elsewhere, New Zealand central bank chief Adrian Orr backtracked a little from the possibility of negative rates, a prospect he had flagged just days before. That helped support the kiwi dollar.

Doubts about the outlook held back commodity prices. Japanese business confidence slumped to a decade low as the economy entered recession. Australian retail sales suffered their steepest-ever decline in April.

And the U.S. economy won’t recover its lost ground until sometime after next year, the non-partisan Congressional Budget Office said on Tuesday.

Brent crude futures were at $34.64 per barrel, having rallied nearly 7% this week. U.S. crude was 0.4% lower at $31.84 a barrel.

“While countries have started to relax restrictions on economic and social activities, economies will not return to where things were before the outbreak,” said strategists at Singapore’s DBS bank in a note.

“Geopolitical tensions, especially between the U.S. and China, have also returned and are likely to intensify into the U.S. elections in November.”

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Spike in some Hong Kong flat sales raises fraud suspicions

HONG KONG (REUTERS) – A jump in the number of Hong Kong flats selling for exactly HK$10 million (S$1.8 million) in recent months has raised suspicions about potential fraud, following a relaxation of mortgage rules for properties sold at that price.

Regulators loosened rules in October, allowing buyers to borrow up to 80 per cent on properties worth HK$10 million or less versus HK$6 million previously, but still only enough for small-to-medium flats in one of the world’s most expensive markets.

For properties priced above HK$10 million, a 50 per cent downpayment is still required.

Data from realtor Ricacorp shows the number of home transactions priced at exactly HK$10 million rose in March and April to 61 and 70 respectively, from usually fewer than 40.

Property and mortgage agents said sellers, under pressure to offload flats as the recession weighs on prices, could be open to helping buyers get higher financing ratios by declaring a lower transaction price and settling the rest separately.

This could constitute both mortgage fraud and tax evasion, realtors said. It can also distort market data that helps with pricing other flats, with HK$10 million transactions now representing close to 2 per cent of monthly totals.

“This can only be done in a turning market when bank valuation is leading the transaction price, otherwise banks may not approve the mortgage,” said Eric Tso, a senior vice president of mortgage agent mReferral Corporation.

Reuters could not verify whether any of the transactions were misrepresenting the full amount.

Bank officials, who declined to be named because they were not authorised to speak to media, said they were aware of the trend and as a precaution did not approve applications if transaction values were 10-20 per cent below the amount estimated by their evaluators.

Since the coronavirus outbreak in January, banks also increased scrutiny on applicants who work in retail, food and beverages and the aviation industries, property sources said.

Banks have been beefing up mortgage standards since the economy officially plunged into recession late last year, including issuing guidelines that monthly mortgage payments cannot exceed 65 per cent of income.

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Big six energy firm OVO/SSE to cut 2,600 jobs in digital drive

OVO Energy, which bought the household supply business of SSE for £500m just months ago, has announced plans to slash 2,600 jobs.

The company said its integration plans, including a drive for digital and investment in a zero carbon future, had been accelerated by the COVID-19 pandemic.

OVO said it had initially expected the moulding of the two companies to have taken a number of years but it hoped to achieve the cuts through volunteers though it could not rule out compulsory redundancies.

The GMB union accused the company of cutting its way to profitability as the industry suffers the effects of the government’s default tariff price cap and falling wholesale energy costs.

OVO said of the roles affected: “As part of the integration, the company will remove complexities and duplication by combining SSE Energy Services and OVO’s home services, lettings business, metering, commercial efforts and support functions.

“It will continue to digitise legacy SSE processes and move the business onto a common set of systems to meet the demands of an increasingly digital consumer and a more agile workforce.

“To accommodate these changes, and as part of a move towards more flexible working the Selkirk, Reading and Glasgow Waterloo Street office locations will be closed.

“The employees in these sites will be able to either work from home or at an alternative office.”

The union Unison said plans to offshore a further 700 jobs to South Africa were abandoned by the company.

Stephen Fitzpatrick, OVO’s chief executive, said: “Today is a very difficult day. We have a brilliant team here and this news isn’t a reflection of anyone’s work.

“What should have been a much longer process to digitise the SSE business and integrate it with OVO has been accelerated due to the impact of the coronavirus.

“We are seeing a rapid increase in customers using digital channels to engage with us, and in our experience, once customers start to engage differently they do not go back.

“As a result, we are expecting a permanent reduction in demand for some roles, whilst other field-based roles are also heavily affected.”

The GMB union accused the company of betraying its workforce.

National secretary Justin Bowden said: “Coronavirus outbreak or not, this is a massive betrayal of promises made to workers and politicians that the sale to OVO would not result in job losses.

“The Covid crisis and the SVT cap have affected the whole energy retail market but you cannot just cut your way out of a crisis in search of profit.”

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