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80% New Unemployment Claims Boggles New York

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80% New Unemployment Claims Boggles New York

The number of unemployment claims in the U.S. leaped to a one-year high in the first week of May. 

While this might seem to indicate a greater unemployment problem or a downturn in the economy, economists are not terribly worried. 

The reason lies in the geographical concentration of the majority of those claims and the unique forces which acted upon it in the first week of May.

 

It Was New York State That Was Responsible For An Astounding 80% Of The Unemployment Claims That Were Filed Recently

It is true that overall unemployment claims for the week jumped from 20,000 to 294,000, according to a Labor Department Report.  However, the four-weeks claim average was only 10,250.

The numbers are definitely intimidating.  However, a number of factors unique to New York most likely contributed to the huge influx of unemployment claims originating from that state. 

Economists do not seem to feel that this week’s numbers are indicative of a larger trend of higher unemployment across the United States.

Quite simply, New York probably suffered from a mere confluence of adverse circumstances, leading to its spike in jobless claims.

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First, There May Have Been So-Called “Payback” From The Pleasantly Mild Winter That New York Experienced This Year

Payback from mild-weathered winters happens when certain employers—such as those in construction—that rely on more temperate weather to do their jobs hire employees earlier in the year than they ordinarily would. 

Then, when the months come when they would usually be looking for new faces, they feel that they already have enough personnel, and they don’t hire any more workers.

This can lead to lower-than-predicted hiring rates later on in the year when they would be expected to be hiring.  It can also give the impression of an economic downturn, where in fact the expected hiring simply happened sooner than predicted.

New York experienced a very mild winter this year, which while good for its maple industry, may be leaving qualified workers in other industries out in the cold this May.  Furthermore, this “payback” is only one factor that may have contributed to the skyrocketing unemployment claims.

A Brief List Of Weather-sensitive Industries:

  • Utility companies
  • Breweries
  • Fashion houses
  • Building companies/construction
  • Sports goods manufacturing

Hiring practices at any or all of these may have contributed to the apparent downturn in New York’s employment numbers.

 

Additionally, Spring Break Came Late This Year In New York

Every Spring Break, the non-teaching staff of schools—custodians, bus drivers, and cafeteria workers—file for unemployment, as they are entitled to do under the law. 

The last six years of data show spikes in unemployment claims lining up with the Spring Breaks of that particular year.  Regardless of how the practice is viewed, these numbers show that it happens regularly.

They also indicate that a not-insignificant number of non-educational workers take advantage of this practice every year. 

This year, Spring Break happened in May in New York, lining up perfectly with mid-winter payback and another major employment event which took a serious toll on New York’s unemployment claim numbers.

 

39,000 Workers Who Went On Strike At Verizon Back In April Became Eligible To Receive Unemployment Insurance In May

A very contentious strike is taking place between Verizon and 39,000 of its workers and has been for a month now.  Verizon wants to outsource customer service calls, and the union claims that this is in direct violation of agreements to keep it local. 

In fact, about 13,000 of the striking workers are call-center employees with concerns about job security.

Because Verizon hired temporary replacements, the striking workers are now eligible to apply for unemployment benefits. 

Furthermore, not only are they eligible, but they were also encouraged to apply by their union.  There is no sign that the strike will end soon as the company is claiming vandalism, and the union believes that the replacement workers hired by Verizon cannot do their jobs to anyone’s satisfaction.

All in all, another 39,000 claims do New York’s unemployment figures no favors.

 

So, Apart From Being Very Unlucky In The First Week Of May, How Is Unemployment Doing?

Economists say that even counting this week, we have made it for 62 consecutive weeks without breaking 300,000 jobless claims.

 This indicates that the job market is improving.  The jobless claims have now been below 300,000 for the longest number of weeks since 1973.

April’s unemployment rates were excellent.  The four-week moving average of claims three weeks ago was at 256,000.  This is the best number we’ve had since December of 1973.

Overall, the job market is in a reasonably good place.  This week, New York simply had the misfortune to be the exception that proves the rule.

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Finance

Dow Jones Industrial Average Breaks 29,000 For The First Time in History

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Screenshot of Dow Jones Industrial chart taken January 15, 2020.
By ELAINE KURTENBACH, AP Business Writer

Slight gains send Dow Jones Industrial Average above 29,000!

The Dow Jones Industrial Average closed above 29,000 points for the first time and the S&P 500 index hit its second record high in three days Wednesday.

The milestones came on a day when the market traded in a narrow range as investors weighed the latest batch of corporate earnings reports and the widely anticipated signing of an initial trade deal between the U.S. and China.

President Donald Trump and China’s chief negotiator, Liu He, signed the “Phase 1″ deal before a group of corporate executives and reporters at the White House. The pact eases some sanctions on China. In return, Beijing has agreed to step up its purchases of U.S. farm products and other goods.

“This was telegraphed well enough that the market is kind of looking through it and toward the next phase and what that means,” said Keith Buchanan, portfolio manager at Globalt Investments.

Health care stocks accounted for much of the market’s gains. Utilities and makers of household goods also rose. Those gains outweighed losses in financial stocks, companies that rely on consumer spending and the energy sector.

The S&P 500 index rose 6.14 points, or 0.2%, to 3,289.29. The index also climbed to an all-time high on Monday.

The Dow gained 90.55 points, or 0.3%, to 29,030.22. The Nasdaq composite added 7.37 points, or 0.1%, to 9,258.70.

Smaller-company stocks fared better than the rest of the market. The Russell 2000 picked up 6.66 points, or 0-4%, to 1,682.40.

The benchmark S&P 500 index is on track for its second straight weekly gain.

Bond prices rose. The yield on the 10-year Treasury note fell to 1.78% from 1.81% late Tuesday.

While limited in its scope, investors have welcomed the U.S.-China deal in hopes that it will prevent further escalation in the 18-month long trade conflict that has slowed global growth, hurt American manufacturers and weighed on the Chinese economy. The world’s two largest economies will now have to deal with more contentious trade issues as they move ahead with negotiations. And punitive tariffs will remain on about $360 billion in Chinese goods as talks continue.

With the “Phase 1” agreement now a done deal, investors have more reason to focus on the rollout of corporate earnings reports over the next few weeks. Earnings have been flat to down for the last three quarters, and if the fourth quarter meets expectations, it should be around the same.

However, analysts are projecting 2020 corporate earnings growth to jump around 9.5%, which is why traders will be listening this earnings reporting season for any clues management teams give about their business prospects in coming months.

“We’re expecting a reacceleration in the back end of the year, so any (company) guidance that brings any type of skepticism to that could threaten the recent rally we’ve had and the gains that we’ve accrued in the past few months,” Buchanan said.

Health care stocks powered much of the market’s gains Wednesday. Several health insurers climbed as investors cheered a solid fourth-quarter earnings report from UnitedHealth Group.

The nation’s largest health insurer, which covers more than 49 million people, said its revenue rose 4% on a mix of insurance premiums and growth from urgent care and surgery centers. Its stock rose 2.8%. Other health insurers also moved higher. Anthem gained 1.6%, Cigna added 1.5% and Humana climbed 1.9%.

Technology companies also rose. The sector is reliant on China for sales and supply chains and benefits from better trade relations. Microsoft gained 0.7% and Advanced Micro Devices gained 0.8%.

Utilities and consumer staples sector stocks also notched gains. Edison International climbed 2.5% and PepsiCo rose 1.7%.

Financial stocks fell the most. Bank of America slid 1.8% after reporting weaker profits due to the rapid decline of interest rates in late 2019.

Energy stocks also fell along with the price of crude oil. Valero Energy dropped 3.3%.

Homebuilders marched broadly higher on news that U.S. home loan applications surged 30.2% last week from a week earlier. The pickup in mortgage applications reflects heightened demand for homes and suggests many buyers are eager to purchase a home now, rather than waiting for the traditional late-February start of the spring homebuying season. Hovnanian Enterprises jumped 6.4%.

Target slumped 6.6% after a disappointing holiday shopping season prompted the retailer to cut its forecast for a key sales measure in the fourth quarter. The company said weak sales of electronics, toys and home goods crimped sales growth to just 1.4% in November and December.

Benchmark crude oil fell 42 cents to settle at $57.81 a barrel. Brent crude oil, the international standard, dropped 49 cents to close at $64 a barrel.

Wholesale gasoline fell 1 cent to $1.64 per gallon. Heating oil declined 3 cents to $1.88 per gallon. Natural gas fell 7 cents to $2.12 per 1,000 cubic feet.

Gold rose $9.70 to $1,552.10 per ounce, silver rose 25 cents to $17.92 per ounce and copper fell 1 cent to $2.87 per pound.

The dollar fell to 109.91 Japanese yen from 110.00 yen on Tuesday. The euro strengthened to $1.1150 from $1.1128.

Markets in Europe closed mostly lower.

AP Business Writer Damian J. Troise contributed.

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