This decline in claims comes as a positive reversal from the previous week’s unexpected rise, which was attributed to temporary shutdowns and Hurricane Beryl’s impact. The prior week’s claims were revised slightly upward to 250,000. The latest data suggests that last week’s disappointing payroll report may have been an anomaly caused by adverse weather conditions.

U.S. stocks rose following the announcement, and benchmark Treasury yields increased above 4%, with the U.S. dollar strengthening against other currencies. Marc Chandler, chief market strategist at Bannockburn Global Forex, remarked, “The talk of an imminent recession seems wide of the mark.”

The improved jobless claims have also led investors to reduce their expectations of immediate Federal Reserve rate cuts, reflecting growing confidence in economic stability. Analysts remain hopeful that this trend will continue, reinforcing the outlook for gradual economic growth and stability in the labor market.

Source:

In manufacturing, overall hiring improved from August. The Bureau reported that the manufacturing industry added 66,000 jobs in September—more than twice the 29,000 new jobs added in August and an improvement on 41,000 in July.

Roughly two-thirds of the returning manufacturing jobs were in durable goods, especially in the motor vehicles and parts sector and machinery. Each added about 14,000 jobs.

The number of jobs that have returned, in manufacturing and in the economy at large, is still dwarfed by the number of jobs lost amid the coronavirus pandemic. Using the data released for September, the manufacturing sector is still 647,000 jobs shy of where it was in February before losing 46,000 jobs in March and 1.3 million in April.

May and June both saw six-digit gains of 240,000 and 357,000 new manufacturing jobs, respectively. Industrial employment fell to five-digit growth in July, where it currently remains despite September’s gains. All told, the overall economy and the manufacturing sector are only about halfway to replenishing all the jobs lost during the first months of the pandemic.

Source: Industry Week

The CARES Act, the law adopted in response to COVID-19, increased the weekly unemployment benefit by $600 through July 31. Even though the additional $600 is no longer offered, many states are approved to participate in a federal $400 extra unemployment payment launched Aug. 8.

The prevalence of reported incidents from every corner of the country is staggering. Georgia found more than 130,000 false claims filed in July. Illinois identified more than 120,000 counts of unemployment insurance fraud in August. Maryland in early July announced 47,000 fraudulent claims. Pennsylvania reported that 10,000 prison inmates filed for benefits.

A group of tractor implement stores in Kansas with a 200-person workforce recently received its third fraudulent unemployment claim since the onset of COVID-19.

Among strategies for responding:

• Address identity theft. A fraudulent claim is a sign that an employee’s sensitive personal information is available to criminals.
• Let employees know about the spike in fraudulent claims and identity theft, and ask them to report fraudulent benefits claims to HR quickly.
• Notify employees quickly. Review whether the named applicant for unemployment benefits is a current or former employee. If it is a current employee, then the claim is likely fraudulent. If it is a former employee, contact the person to confirm whether he filed a claim.
• Report the fraud. Both HR and the employee should notify the state unemployment benefits agency and local police department. The U.S. Department of Labor provides resources on how to report unemployment fraud in each state.

Source: SHRM

The problem is that the boost to unemployment benefits enacted by Congress is overkill for many workers, leading to perverse incentives.

Because the extra $600 is a flat extra benefit, the gap between what unemployed workers can get now versus what they were earning when they worked is even larger for lower-earning workers. And it is not just deep-blue states like California. In Texas, for example, unemployed workers who previously earned up to $58,000 per year will be better off unemployed, at least for the first four months.

Now think of what this means when we re-open the economy. Some workers will go back to work because they might fear their job disappearing if they hold out. But many will not want to give up the higher payments, and businesses will now be competing with government for workers at the same time they are digging out of a huge financial hole. In fact, many low margin businesses may not be able to afford those higher wages.

Do not get us wrong; we like faster wage growth. What we do not like are government policies that create perverse incentives to avoid work once it becomes more available.

If bad policies drive wage increases, it makes it tough for businesses to hire, which leads to a more prolonged surge in unemployment and a slower return to the standard of living we had before COVID-19.

Early in the Great Depression, the Hoover administration urged companies to maintain wages in spite of deflation. The idea was that if wages were kept high, workers would have more purchasing power, which would boost output. But workers were already getting a boost from falling prices, and firms that kept wages high would not hire new workers. It made the Depression worse.

By boosting unemployment benefits, the government has put businesses in a position where they have to boost wages, indirectly making the same mistake as President Hoover.

Brian S. Wesbury is chief economist and Bob Stein is deputy chief economist at First Trust. Their column appeared in Monday Morning Outlook. Read it in its entirety at .

The Canadian economy shed 1.01 million jobs on a seasonally adjusted basis, Statistics Canada reported. The March result smashed the previous record for a one-month job loss, which was January 2009, at the height of the global recession, when the economy lost 125,000 positions.

The record plunge was anticipated after officials here revealed that in the span of roughly a month, about 20 percent of the country’s labor force applied for jobless benefits and income support after authorities ordered sectors of the economy shut down to help curb the spread of the virus.

The government responded with more than $100 billion Canadian ($71 billion U.S.) in direct support to individuals and businesses. Combined with other measures such as deferred tax payments and loan guarantees, the total Canadian fiscal response package represents 11 percent of the country’s gross domestic product.

“As shocking as these numbers are, the big issue is how long do the shutdowns last, and thus how persistent is this spike in joblessness,” said Douglas Porter, chief economist at BMO Capital Markets.

Prime Minister Justin Trudeau said last week the current standstill in economic activity—which includes the compulsory shutdown of nonessential businesses—could last weeks or months.

Canada’s job drop in March, adjusted on a proportional basis, is the equivalent to over eight million U.S. jobs lost.

Canada collected data for the March jobs report a week later than the U.S. nonfarm payroll report. As a result, Canada’s jobs report “might have captured more of the sudden-stop in activity, and on a relative basis might mean there’s at least slightly less downside in the Canadian numbers left to show up than those” in the U.S., said Avery Shenfeld, chief economist at CIBC Capital Markets.

Source: Wall Street Journal