The American economy gained 1.8 million jobs last month, even as the coronavirus surged in many parts of the country and newly reintroduced restrictions caused some businesses to close for a second time.
Still, the increase reported Friday by the Labor Department was well below the 4.8 million jumpin jobs in June and a sign that momentum is slowing after a burst of economic activity in late spring. The unemployment rate fell to 10.2 percent.
“The easy hiring that was done in May and June has been exhausted,” said Michelle Meyer, head of U.S. economics at Bank of America. “With many companies not running at full capacity, it becomes harder to get that incremental worker back in.”
Although the gain of 1.8 million is heartening, it represents only a fraction of the 22 million jobs lost in March and April, when all but essential businesses closed.
The Labor Department report follows the expiration of federal supplemental unemployment benefits of $600 a week late last month, payments that kept many households afloat while buoying the economy. Republicans and Democrats have been at odds over a new emergency package that could restore the supplement in full or in part.
U.S. stock futures dipped, following European markets lower on Friday, as investors moved cautiously amid escalating tensions between the United States and China over tech companies, and as they awaited a fresh report on American job growth, to be released at 8:30 a.m. Eastern time.
Futures for the S&P 500 were predicting a downbeat start to the trading day on Wall Street. European indexes were slipping in midmorning trading, with the Stoxx Europe 600 index down 0.1 percent. Asian markets ended the day broadly lower after President Trump’s decision to order sweeping restrictions on two popular Chinese social media networks, TikTok and WeChat.
Amid the uncertainty, 10-year U.S. Treasury notes rose in value as investors sought a safe haven, and oil futures slipped. Gold, which has been climbing since mid-July, was slightly lower, at about $2,060 an ounce.
Late Thursday, the Trump administration announced sweeping restrictions on TikTok and WeChat that would take effect in 45 days. The order essentially sets a 45-day deadline for an acquisition of TikTok, which is in talks to be bought by Microsoft.
The moves are expected to prompt retaliation from China. A Chinese Ministry of Foreign Affairs spokesman called the executive orders a “nakedly hegemonic act.” Shares in Tencent, the parent company of WeChat, fell almost 6 percent.
Analysts expect that data to be released on Friday will show that the United States gained 1.5 million jobs in July, as the economy struggles to recover from the pandemic’s lockdowns. But some forecasters say the data could show a net loss of jobs, because a surge in coronavirus cases has caused some states to reimpose restrictions on businesses. Over all, 22 million jobs were lost in March and April, when all but essential businesses closed.
Meanwhile, talks in Washington aimed at enacting a new round of economic relief for workers, businesses and states drag on without resolution. On Thursday night, lawmakers and White House officials ended more than three hours of negotiations starkly divided.
After the recent lapse of a federal supplement to unemployment payments, and with a patchwork of eviction moratoriums either at an end or set to expire soon, 30 million to 40 million tenants risk losing their homes in the coming months, according to a report released Friday by dozens of academic researchers and housing advocates.
Even if the actual number is a fraction of that figure, it would still be several times the current annual rate of eviction filings — about 3.7 million a year. And it could have a cascade of effects that erode affordable housing and weaken an already hobbled housing system long after the coronavirus crisis has subsided, by pushing small landlords into foreclosure and further weakening state and local budgets as property-tax collections fall behind.
Citing a range of public and private data sources, the report noted that a broad swath of renters had until recently been protected by the $600 a month in supplemental unemployment payments, but many are now falling behind. These bills are accruing just as several federal, state and local eviction moratoriums are expiring, and amid a continued surge in the virus in many hot spots, and a darkening outlook for the economy.
“The public costs of eviction are far-reaching,” the report said. “Individuals experiencing displacement due to eviction are more likely to need emergency shelter and rehousing, use inpatient and emergency medical services, require child welfare services, and experience the criminal legal system, among other harms.”
Here’s some of the news you might have missed on Thursday.
Uber said on Thursday that its revenue in the second quarter dropped 29 percent to $2.2 billion from a year ago and that its net loss narrowed to $1.8 billion, as the ride-hailing giant deals with the fallout from the coronavirus pandemic. The revenue decline was the steepest since Uber went public in May 2019.
Rupert Murdoch’s News Corp reported a $401 million loss for the three months ending in June, with much of the decline related to impairment charges for some of its assets in Britain and Australia and restructuring costs related to the coronavirus pandemic. The company revealed for the first time financial details of its Dow Jones division, the group that publishes The Wall Street Journal. The unit was News Corp’s only growing business on an annual basis.
With operations ceased for the entirety of the quarter and most of its employees laid off or furloughed, AMC Entertainment, the largest theater chain in the United States, posted a quarterly loss for the period ended June of $561.2 million. Revenues totaled $18.9 million, a 98.7 percent plunge from the same period last year for the Kansas-based company. The coronavirus has laid waste to AMC’s 1,000 theaters scattered across the globe, calling into question whether it would be able to stay financially viable.
The Trump administration is considering forcing Chinese companies to delist their shares from stock exchanges in the United States unless they share their audits with American regulators, a move that would further ratchet up tension between the world’s two largest economies. The President’s Working Group on Financial Markets recommended the move in a report released on Thursday as a way to protect American investors from what it described as the risks posed by Chinese companies.
Late Thursday, the Trump administration issued an executive order that could pull WeChat, China’s most important app, from Apple and Google stores across the world and prevent American companies from doing business with its parent company, Tencent. Light on details, the decree could prove cosmetic, crushing or something in between.
Taken together with Thursday’s twin order against the Chinese-owned video app TikTok, the move against WeChat marks a shift in the American approach to the Great Firewall, which for years has kept companies like Facebook and Google from operating in China. Restricting WeChat and TikTok could be the first steps in an eye-for-an-eye reprisal.
Paul Mozur and Raymond Zhong of The Times write:
In China, WeChat does more than any app rightfully should. People use it to talk, shop, share photos, pay bills, get their news and send money.
With much of the Chinese internet locked behind a wall of filters and censors, the country’s everything app is also one of the few digital bridges connecting China to the rest of the world. It is the way exchange students talk to their families, immigrants keep up with relatives and much of the Chinese diaspora swaps memes, gossip and videos.
If the Trump administration’s executive order is enforced strongly when it takes effect in 45 days, it will take dead aim at China’s single most groundbreaking internet product, which 1.2 billion people use every month. An effective ban on the app in the United States would cut short millions of conversations between investors, business partners, family members and friends. The threat alone will likely start a new chapter in the deepening standoff between China and the United States over the future of technology.
China’s exports rose last month at their fastest pace so far this year, the country’s General Administration of Customs announced on Friday.
Chinese factories ran at full throttle this summer, after the government brought the coronavirus almost completely under control within the nation’s borders. Exports were up 7.2 percent in July compared with a year ago, far above what economists had predicted — and even as the pandemic continued to ravage other nations’ economies.
By contrast, the value of China’s imports actually shrank 1.4 percent last month, a worse performance than the modest increase economists had expected. The physical volumes of China’s imports kept rising last month, but that was more than offset by a global fall in prices for oil and other commodities that the country buys from abroad.
The combination of rising exports and cheaper imports means that China’s trade surplus is widening sharply. That could trigger trade tensions in the months ahead, particularly as other countries face job losses from economic slowdowns triggered by the virus.
Despite Friday’s strong export data, share prices had fallen 1.7 percent by early afternoon on China’s stock exchanges. Investors worried about President Trump’s executive order on Thursday that announced broad restrictions on two popular Chinese social media networks, TikTok and WeChat.
Denmark’s stock market is having a stellar year so far.
The stock indexes for the tiny northern European nation are easily beating out the S&P 500, which is up slightly for the year, and Japan’s Nikkei 225 and the Stoxx Europe 600 index, which are both in negative territory.
The Danish indexes, such as the OMX Copenhagen 25, are up more than 14 percent in 2020, or more than 20 percent if you calculate its return in dollar terms. That’s within spitting distance of other market bright spots, like the tech-heavy Nasdaq Composite, which has climbed more than 23 percent on the strength of lockdown-friendly companies like Amazon and Apple.
What accounts for such a stellar performance? Experts say it’s a combination of several factors:
an effective response to the coronavirus crisis (assisted by the country’s robust social safety net)
a collection of companies well positioned to weather the crisis
a knack for well-balanced management
The main contributor to the Danish stocks’ performance is a matter of what the companies do rather than where they do it: Roughly 50 percent of the market capitalization of Danish stocks is in almost recession-proof health care and pharmaceutical companies — a solid portfolio in the midst of a global pandemic.
“The mix of the Danish market is completely different than you see in the global market, and there you have, sort of, the explanation for why has the Danish market performed so much better,” said Carsten Jantzen Leth, head of Danish Equities at Nordea Asset Management.