As a continuous decline in the number of daily COVID cases prompt US states to re-open their economies, many employers are willing to hire more jobless people to respond to growing demand causing initial jobless claims to expect to fall below the 400 thousand mark for the first time since the coronavirus pandemic hit the labor market in March 2020. In March private businesses in the US hired 565 thousand workers and since then they had a huge increase of 762 thousand in April 2021 (below market expectations a 800 thousand rise). It was the most rapid jobless recovery since September, as the labor market recovery gathered pace amid an acceleration of COVID-19 vaccinations, the lifting of pandemic business restrictions in many states and the government’s $1.9 trillion stimulus package. What’s more, many states recently decided to withdraw from federal unemployment benefit programs, following reports that it has been more difficult to hire as the benefits pay more than most minimum wage jobs. Still, initial claims remain well above pre-pandemic levels of about 210 thousand. Meanwhile, continuing claims are seen dropping to 3.615 million in the May 22nd week from 3.642 million the week before.
However,the service-providing sector added 636 thousand jobs led by leisure & hospitality, trade, transportation & utilities, professional & business, and education & health, and the goods-producing sector added 106 thousand jobs as well, boosted by rises in manufacturing and construction employment.
As well as strengthening the greenback, the unemployment data also led to a rise in government rates to above 1.6%. On the other hand, the equity market moved in a different direction, losing strength in the morning after the Russian Sovereign Wealth Fund’s decision to wipe out its dollar investments (around $41.5bn of the $186bn under management) within a month. In the afternoon, the rumours that President Biden was prepared to amend the proposal to raise corporate tax (from 21% to 28%) by adding a minimum tax of 15% (in line with the proposed global minimum) facilitated the rebound from the lows. Biden strategy had the aim of limiting/eliminating tax dumping and getting closer to the Republicans for an agreement on the infrastructure plan.