MetroIntelligence Economic Update by P. DUFFY
Initial unemployment claims dip 15 percent to 881,000, continuing claims fall 9 percent to 13.2 million
In the week ending August 29, initial unemployment claims were 881,000, a decrease of 130,000, or 14.8 percent, from the previous week’s revised level. Continuing claims during the week ending August 22 were 13,254,000, a decrease of 1,238,000, or 9.3 percent, from the previous week’s revised level.The total number of people claiming benefits in all programs for the week ending August 15 was 29,224,546, an increase of 2,195,835, or 7.5 percent, from the previous week.
August service sector index slips 1.2 points to 56.9, but remains well in growth mode
The Services PMI™ (formerly the Non-Manufacturing NMI®) registered 56.9 percent, 1.2 percentage points lower than the July reading of 58.1 percent. This reading represents growth in the services sector for the third straight month. Respondents’ comments are mostly optimistic and industry specific about business conditions and the economy as businesses are starting to reopen. Industries that have not reopened remain concerned about the ongoing uncertainty. There is a challenge with capacity and logistics due to the pandemic and the impact on deliveries and order fulfillment.
Large employers announced 115,762 jobs cuts in August, mostly in transportation
Job cuts announced by U.S.-based employers in August totaled 115,762, down 56 percent from July but up 116 percent year-on-year. The leading sectors for job cuts last month were transportation (i.e., airlines), entertainment/leisure and government. An increasing number of companies that initially had temporary job cuts or furloughs are now making them permanent.
Beige Book: Economic activity increasing, but remains well below pre-pandemic levels
Economic activity increased among most Districts, but gains were generally modest and activity remained well below levels prior to the COVID-19 pandemic. Manufacturing rose in most Districts, which coincided with increased activity at ports and among transportation and distribution firms. Consumer spending continued to pick up, sparked by strong vehicle sales and some improvements in tourism and retail sectors. But many Districts noted a slowing pace of growth in these areas, and total spending was still far below pre-pandemic levels.
Productivity rose 10.1 percent in 2Q20 and 2.8 percent year-on-year as output fell less than hours worked
Nonfarm business sector labor productivity increased 10.1 percent in the second quarter of 2020, as output decreased 37.1 percent and hours worked decreased 42.9 percent. The declines in both output and hours worked in the second quarter of 2020 were the largest in these series, which begin with data for first-quarter 1947. From the second quarter of 2019 to the second quarter of 2020, productivity increased 2.8 percent, reflecting an 11.2-percent decrease in output and a 13.6-percent decrease in hours worked.