• Unemployment filings expected to drop to 800,000 in December 11 week.
  • Prior week's 853,000 was the highest in almost three months.
  • Early November rise presaged the weak payrolls report.
  • Retail Sales unexpectedly dropped in November in all three categories.
  • Dollar vulnerable to poor labor marker reports.

The second round of pandemic induced business closures in California, New York and a few other states has stalled the improving labor market and is threatening to reverse the fourth quarter economic recovery.

Filing for Initial Jobless Benefits are forecast to fall to 800,000 in the December 11 week. The previous week's 853,000, a jump of 137,000, was the highest since September 18. Continuing Claims are expected to to decrease to 5.598 million in the week of December 4 from 5.757 million in the prior.

Closures redux

Several states, notably California with the largest economy, which has ordered all non-essential businesses closed, and New York which has banned indoor dining in New York City with its mayor threatening a total lockdown, have slowed improvement in labor market.

Other states, Florida and Texas instructively, remain open with far fewer COVID-19 cases and many fewer fatalities. No hospital system in the United States has been overwhelmed by the current wave of COVID-19 cases. Several states in the mid-West have seen their cases numbers peak two or three weeks ago.

Initial Claims and Nonfarm Payrolls

The restaurant, hospitality and retail industries have been the hardest hit by the pandemic business closures. Even though many restaurant workers have probably lost their jobs as businesses closed, retail shops had returned to relatively normal staffing across the country until these latest shutdowns.

Claims first began to rise in early November. Initial filings rose from 711,000 in the November 6 week to 787,000 in the November 20 week. Market concern that this might be more than normal variation seemed misplaced when the following week, November 27, claims dropped to 716,000.

Initial Jobless Claims

However, the subsequent week, December 4, claims reversed again to 853,000, the highest number of new requests claims in 11 weeks. Claims are again forecast to drop back to 800,000 in this report.

November payrolls added 245,000 workers the fewest of the seven-month recovery and just over half of the 469,000 consensus forecast.

Nonfarm Payrolls

Before the November payrolls were released on December 4, a two-week rise in Initial Jobless Claims, the first since August, had warned that the labor market might be deteriorating under the pressure of the new business closures ordered by several states.

Retail Sales

Consumer spending in November has confirmed the weakening economy. Retail Sales fell1.1%, its largest drop since April and almost tripling the -0.3% forecast. Sales ex-Autos slipped 0.9% on a 0.1% prediction and the Control Group fell 0.5%, missing its 0.2% projection.

November is the important lead for the holiday shopping season. With so many retail businesses in dire condition from the prolonged reduction in sales this report, confirming what most proprietors already know, confirms the bad news.

Conclusion and the market

The dollar has been battered by the economic slowdown in the United States. The return of labor problems and increases in unemployment claims, in addition to reporting the changes in the labor market, brings back the unpleasant shocks of March and April.  The greenback cannot recover until the facts change.

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD extends slide toward mid-1.0200s after US data

EUR/USD extends slide toward mid-1.0200s after US data

EUR/USD continues to decline toward 1.0250 during the American trading hours on Friday. After the data published by the UOM showed that the long-run inflation outlook rose to 3% in August from 2.9% in July, the dollar gathered strength against its rivals, weighing on the pair.

EUR/USD News

GBP/USD pushes lower 1.2100 on broad dollar strength

GBP/USD pushes lower 1.2100 on broad dollar strength

GBP/USD is trading deep in negative territory near 1.2100 during the American session on Friday. With the UoM's Consumer Sentiment Survey pointing to a modest increase in the long-run inflation outlook, the US Dollar Index extended its rally, reflecting a broad dollar strength.

GBP/USD News

Gold clings to modest gains above $1,790

Gold clings to modest gains above $1,790

Gold stays relatively resilient on Friday and trades modestly higher on the day above $1,790. Although the greenback continues to outperform its rivals on the latest US data, falling US Treasury bond yields help XAU/USD hold in positive territory.

Gold News

Shiba Inu ready to go ballistic: Shiba Eternity released in Vietnam

Shiba Inu ready to go ballistic: Shiba Eternity released in Vietnam

Shytoshi Kusama, the project leader of Shiba Inu announced the launch of Shiba Eternity for Vietnamese players. The game is available for testing and the team has asked users for their review. 

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

Majors

Cryptocurrencies

Signatures