Unemployment filings fell again last week as the improving public health situation and the easing of pandemic-related restrictions allowed the labor market to continue its gradual return to normal.
About 505,000 people filed first-time applications for state jobless benefits, the Labor Department said Thursday, down more than 100,000 from a week earlier. In addition, 101,000 people filed for Pandemic Unemployment Assistance, a federal program covering freelancers, self-employed workers and others who don’t qualify for regular benefits. Neither figure is seasonally adjusted.
Applications for unemployment benefits remain high by historical standards, but they have fallen significantly in recent weeks after progress stalled in the fall and winter. Weekly filings for state benefits, which peaked at more than six million last spring, fell below 700,000 for the first time in late March and has now been below that level for four straight weeks.
“In the last few weeks we’ve seen a pretty dramatic improvement in the claims data, and I think that does signal that there’s been an acceleration in the labor market recovery in April,” said Daniel Zhao, senior economist at the employment site ZipRecruiter.
Economists should get a clearer picture of the labor market’s progress on Friday when the Labor Department will release data on hiring and unemployment in April. The report is expected to show that employers added about one million jobs last month, up from 916,000 in March. The leisure and hospitality industry, which was hardest hit by the initial phase of the pandemic last spring, has led the way in the recovery in recent months, a trend that forecasters believe continued in April.
Many employers have said in recent weeks that they would like to hire even faster but have struggled to find enough workers. Some have blamed enhanced unemployment benefits for discouraging people from returning to work. On Tuesday, Gov. Greg Gianforte of Montana said his state would pull out of a federal program offering enhanced benefits to unemployed workers and would instead pay a $1,200 bonus to recipients when they find new jobs.
Economic research has found that unemployment benefits can reduce the intensity with which workers search for jobs. But most studies find that the impact on the overall labor market is small, especially when unemployment is high. And Mr. Zhao and other economists say there are other reasons that labor supply might be rebounding more slowly than labor demand. Many potential workers are juggling child care or other responsibilities at home; others remain cautious about the health risks of returning to in-person work.
“I think we will see labor supply improve pretty dramatically in the coming months as the pandemic abates,” Mr. Zhao said.
The Bank of England unveiled a much brighter outlook for the British economy on Thursday, saying it would return to its prepandemic levels at the end of this year as lockdowns ended, consumers spent billions of pounds in extra savings and the vaccine rollout reduced public health worries.
The central bank, in its quarterly monetary report, raised its growth forecasts and slashed its predictions for unemployment. The British economy is now projected to grow 7.25 percent this year, compared to a forecast of 5 percent growth three months ago. This would be the fastest pace of expansion for the economy since official records began in 1949, pulling Britain out of its worst recession in three centuries.
The higher forecast comes after the government has announced tens of billions of pounds in additional spending to see workers and businesses through the summer, and outlined its plan to end lockdown restrictions by late June.
Britain’s economic output “recovers strongly over the course of 2021, albeit only back to pre-Covid levels,” Andrew Bailey, the governor of the Bank of England, said in a news conference on Thursday.
“Of course, there remains uncertainty around how the pandemic might evolve and so there are risks around this projection, including from renewed waves of infections in the U.K. and other countries,” he said.
He added that there was also an “enormous amount of uncertainty” about how the pandemic might permanently change people’s working and living patterns, and the effect that will have on the shape of the economy.
Even though inflation is expected to rise above the central bank’s 2 percent target, policymakers voted unanimously to keep the benchmark interest rate at 0.1 percent. It cut rates to that level in March 2020 at the start of the coronavirus pandemic.
The central bank also said it would slow the pace of its £875 billion government bond-buying program, which was projected to run through 2021, so that it does not finish the program before the end of the year. If the central bank had continued at its current pace, the buying program would have ended several months early. Instead of buying £4.4 billion government bonds a week, the central bank will buy £3.4 billion. The program helps keep government borrowing costs low and supports the economy by encouraging investors to buy other assets.
The minutes of the central bank’s policy meeting showed that officials don’t intent to tighten monetary policy until “there is clear evidence that significant progress” is made on the economic recovery and inflation is sustainably at the bank’s target.
The Bank of England now forecasts unemployment to peak at 5.5 percent later this year, because of the extension of the government’s furlough program. In February, the central bank predicted the unemployment rate would rise as high as 7.75 percent.
The easing of pandemic restrictions will also increase consumer spending. The central bank added that it now expected people to spend about 10 percent of the excess savings they built up in lockdown based on new survey evidence. The previous estimate was just 5 percent.
But these extra savings are “not evenly distributed,” Mr. Bailey said. And they are concentrated among people who are older and already wealthier.
Gary Gensler, the newly installed chair of the Securities and Exchange Commission, is testifying on Thursday, at noon Eastern time, before the House Financial Services Committee. He will address the meme-stock volatility in January that led to trading restrictions and prompted an outcry about Wall Street’s relationship with retail investors.
“I think these events are part of a larger story about the intersection of finance and technology,” Mr. Gensler will say in his prepared remarks, highlighting seven factors at play that also hint at his regulatory priorities in the months ahead:
Gamification. Fun features combined with predictive analytics on trading apps increase engagement. Watching a movie based on a streaming app recommendation, “we might lose a couple of hours,” Mr. Gensler said. “Following the wrong prompt on a trading app, however, could have a substantial effect on a saver’s financial position.” He suggested it may be time for new rules to address the practice.
Payment for order flow. Many retail brokers don’t charge fees for trades, earning money instead by directing customer orders to wholesalers to execute. More trades generate more payments, which raises questions about conflicts of interest, consumer protection and data aggregation, Mr. Gensler said.
Market structure. A few wholesalers account for a growing share of retail stock trading volume, with Citadel Securities particularly dominant. This concentration can “lead to fragility, deter healthy competition and limit innovation,” Mr. Gensler said.
Short-selling transparency. He wants to increase “transparency in the stock loan market.”
Social media. Investors exchanging views online is fine, but Mr. Gensler worries bad actors take advantage of legitimate debates. In particular, this risks sending false signals to algorithms that some investors use to gauge the “relationships between words and prices.”
Plumbing. When brokers restricted customer trading in meme stocks, they blamed clearinghouses and two-day settlement times. Mr. Gensler said same-day settlement is technologically possible and has asked for a draft proposal on speeding up settlement.
Systemic risks. The S.E.C. will issue a report over the summer, the chair said, examining what happened in detail during the meme-stock frenzy and considering “whether expanded enforcement mechanisms are necessary.”
A spike in sales to Chinese customers helped Volkswagen rebound strongly from the disruption caused by the pandemic, the carmaker said Thursday, underlining China’s importance to the German economy.
Sales in the first three months of 2021 rose 13 percent compared to a year earlier, to 62.4 billion euros, or $75 billion, while profit rose nearly sevenfold to 3.4 billion euros, the company said. Vehicle sales in China, which is Volkswagen’s largest market, rose more than 60 percent.
The recovery in sales bodes well for the German economy. Vehicles are the country’s biggest export product. But Volkswagen also illustrates Germany’s dependence on China when tensions between Beijing and the European Union are rising because of the Chinese government’s treatment of minority groups and its crackdown on dissent in Hong Kong.
As is typical for Volkswagen, the company’s Audi and Porsche divisions generated most of the profit. The luxury vehicles have a higher profit margin than the more affordable cars that account for most of Volkswagen’s volume.
Volkswagen said it was able to manage the shortage of semiconductors that has afflicted all carmakers in recent months, but warned that the chip famine could become more acute in months to come.
Volkswagen sold 60,000 battery-powered vehicles out of a total of 2.4 million during the quarter. That may be a disappointment to the company, which has staked its future on a new line of electric cars, the first of which went on sale late in 2020.
Stocks on Wall Street were flat on Thursday, while European shares were mixed, as investors digested an assortment of corporate earnings reports.
The S&P 500 was little changed in early trading. The benchmark Stoxx Europe 600 index was 0.3 percent lower and the FTSE 100 in Britain was 0.2 percent higher.
In the United States, the Labor Department revealed its weekly tally for new state claims for unemployment insurance on Thursday, which showed the number is continuing to decline. About 505,000 people filed first-time applications, down more than 100,000 from a week earlier.
Oil futures fell after recent gains, with West Texas Intermediate, the American benchmark, down 0.6 percent to $65.25 a barrel. Yields on 10-year Treasury notes were unchanged.
The Biden administration’s surprise announcement that it would support efforts to waive intellectual property protections for coronavirus vaccines caused share prices for some pharmaceutical companies to tumble.
Pfizer fell 3.6 percent in early trading Thursday. BioNTech, the German firm that developed a vaccine with Pfizer, was also lower.
Shares of Moderna fell nearly 10 percent, while Novavax, the Maryland-based drug maker which is expected to seek U.S. approval for its vaccine soon, dropped more than 6 percent on Thursday.
The British pound rose 0.2 percent against the U.S. dollar as the Bank of England announced it would hold interest rates at 0.1 percent but would slow down the pace of its bond-buying program for the rest of the year. Policymakers also increased their forecasts for the British economy.
Consider it a small victory.
Eurostar, the sleek and speedy high-speed train service that ties London, Paris, Brussels, Amsterdam and other cities, will increase as of May 27 its timetable to two trains per day on its once heavily-traveled Paris-London route, up from just one round-trip train per day imposed during the pandemic.
The slightly increased service comes as governments in Europe plan to slowly lift longstanding national restrictions on travel designed to combat the spread of the virus. From a peak of running more than 60 trains a day, Eurostar cut service during the pandemic to one daily round-trip between London and Paris, and one on its London-Brussels and Amsterdam routes.
The Brussels/Amsterdam route will remain the same with one train in each direction per day, a spokesman said, adding that Eurostar will adapt its timetable should demand increase, which still depends on travel restrictions across its routes.
Eurostar’s future has been thrown into turmoil as pandemic measures led last year to a 95 percent slump in ridership, creating a cash crunch and pushing the iconic company to the brink of bankruptcy.
While some airlines and other tourist-related businesses in Europe have been able to rely on government support during the crisis, Eurostar, an independent train operator, isn’t eligible for direct state aid.
Last month, the company, which is now owned by a consortium that includes the French and Belgium national railways, reportedly secured a deal with its lenders to refinance a debt pile worth £400 million ($553 million). The British government, which in 2015 sold its stake in the rail company, last month declined to back a broader financial rescue package.
A spokesman for Eurostar said it had no new details on a financial rescue, but said that “conversations are still progressing.” The spokesman added that it is “too early to predict a recovery to prepandemic levels, this would be very much dependent on the easing of international travel restrictions which are yet to be confirmed.”
Eurostar trains will continue to maintain some vacant seats onboard to allow for social distancing. The company said it is advising riders to check with their embassies before traveling, and to consult the company’s website for the latest information.
Tim Lorentz, a special-education teacher in Spokane, Wash., loves both cars and boats. He has raced cars and has owned a variety of muscle and exotic vehicles.
“Car guys always want to own or drive a unique car that no one else owns,” Mr. Lorentz said. “I created an eight-passenger convertible. Why not a boat mounted over a convertible? I have never seen another one like it.”
And so the LaBoata was born. Mr. Lorentz, now 65, built it in 2009 using a white 1993 LeBaron a used 17-foot boat he got for $100, Mercedes Lilienthal reports for The New York Times.
The LaBoata was “instant fun,” he said, until he received a letter from the Washington Department of Motor Vehicles canceling his registration and title. The authorities had noticed his converted convertible, and they weren’t amused. He removed the boat shell, drove the car to the D.M.V. and had it reinspected, reinstated and relicensed. He went home and popped the boat back on, and he has had no issues since.
Mr. Lorentz is part of a community that builds cars out of scrap. Kelvin Odartei Cruickshank, who is 19 and lives in Accra, Ghana’s capital city, built, from scratch, a two-person car that looks like a ramshackle DeLorean. It took three years to complete. Mr. Cruickshank used about $200 of scrap metal and parts not normally used in cars because of financial constraints.
Fox News, the cable news giant controlled by Rupert Murdoch, kept its parent company flush in the first three months of the year, notching a slight gain in profit and sales despite a drop in viewers. Altogether, Fox Corporation beat Wall Street expectations with a sevenfold increase in profit to $567 million and a 6.5 percent drop in revenue to $3.2 billion compared with the same period a year prior. But revenue at most of its businesses dropped as fewer viewers tuned into the company’s cable channels and the Fox broadcast network, in part because Fox did not host the Super Bowl this year. Total advertising sales fell 24 percent to $1.2 billion.
Uber said its business was recovering from the slowdown caused by the pandemic, although it continued to lose money. The company said on Wednesday that revenue was $2.9 billion in the first three months of the year, down 11 percent from the same period a year ago. Excluding money earmarked for a settlement with drivers in Britain, Uber’s revenue was $3.5 billion, an 8 percent increase from the previous year that outpaced Wall Street expectations of $3.28 billion.
The New York Times Company recorded its smallest gain in new subscribers in a year and a half. The Times reported a total of 7.8 million subscribers across both print and digital platforms, with 6.9 million coming for online news or its Cooking and Games apps. The company added 301,000 digital customers for the first three months of the year, the lowest increase since the third quarter of 2019. The company reported adjusted operating profit of $68 million, a 54 percent jump from last year, as it generated more dollars from each subscriber, partly because of the expiration of promotional rates as the new year rolled over. Total revenue rose modestly, about 6.6 percent, to $473 million.