Market participants in the week ahead are set to receive further updates on the battered domestic labor market, amid a push across several states to reopen their businesses.
The U.S. Bureau of Labor Statistics (BLS) is on tap to unveil its employment picture for April on Friday, after more than 20 million Americans filed for unemployment insurance in the month.
The recent wave of novel coronavirus-spurred business closures, cost-cutting and government-mandated restrictions in the leisure, hospitality and broader service sectors, has driven armies of workers to the unemployment lines.
The U.S. Department of Labor (DOL) noted that the advance figure for seasonally adjusted initial claims in the week ending April 25 amounted to more than 3.8m, with the prior week’s level upwardly revised by 15k to over 4.44m – bringing the 4-week moving average to just north of 5.0m.
Since the week of March 20, the DOL has reported over 30.3m filings of initial claims for unemployment benefits, and some analysts think the BLS’s upcoming number of nonfarm payroll losses could surge to as many as 22m in April, with the unemployment rate potentially soaring to 16%, according to a Bloomberg survey.
Should these figures materialize, joblessness would surpass the previous high of 19.6m set in September 1945, with the rate of unemployment trouncing the prior record of 10.8% in the last two months of 1982.
Re-openings
Against this backdrop, many businesses, government officials and workers across the country have been increasingly under pressure to mobilize and return activity closer to pre-pandemic times, while generally adhering to federal safety guidelines.
In response to the economic carnage inflicted by COVID-19 containment measures, the White House – with guidance from the Centers for Disease Control and Prevention (CDC) – recently released a three-phased approach under the umbrella of ‘Guidelines for Opening Up America Again,’ which aims to help state and local officials when reopening their economies, “getting people back to work, and continuing to protect American lives.”
Partial re-openings are apparently planned in several states, including in Arizona, Florida, Kansas, Minnesota and Kentucky, while underway in others such as Georgia, Maine, Ohio, Pennsylvania, South Carolina and Texas.
However, while these states have pushed forward to jump-start their economies, statewide ‘stay-stay-home’ orders remain in place for West Coast states California, Oregon and Washington, as well as for Michigan, Illinois, Louisiana, New York, Connecticut, Massachusetts, and Virginia, among several others.
With companies hoping to revive their businesses in those areas where restrictions have been eased, real estate investment trusts (REITs) such as Simon Property Group (SPG) are reportedly planning on opening dozens of malls in parts of the country.
Returning to Work
The return to work will most likely pose significant challenges, as management and workers adhere to sanitation rules, and many employees working from home choose to continue the ‘remote’ habits they have formed, given the opportunity.
Andrew Challenger, senior vice president of global outplacement firm Challenger, Gray & Christmas, said that while “eager to get back to work, employers are preparing for an anxious workforce.”
“It is imperative not only to worker safety, but to productivity, that employees feel their companies are taking every measure possible to limit the spread of the virus.”
Challenger added that one way “companies are ensuring safety and well-being is to keep workers who can do their jobs from home, at home.”
In a recent Challenger survey conducted April 12-16, 28% of companies responded they would allow some of their workers to work from home permanently and the same number reported they would allow workers to work from home until they felt safe to return.
Indeed, prolonged periods of working remotely are also likely to create habits that may be difficult to break.
Wendy Wood, professor of psychology and business at the University of Southern California, for instance, recently noted that the “more your home context is like your office, the more your surroundings will activate your regular work activities,” and “the more you repeat your work habits at home, the more automatic” itbecomes.
Other placement firms such as Menlo Park, California-headquartered Robert Half International (NYSE: RHI), have recently observed how staffers feel about returning to the workplace from their ‘at home’ locations.
A survey conducted by Robert Half of more than 1,000 professionals about their current work situation and future expectations offered a glimpse into how sentiment and protocol at businesses may change.
According to the survey, for example, 56% of professionals worry about being in close proximity to colleagues; 74% would like to work remotely more often than before the outbreak (albeit more parents (79%) than those without children (68%) expressed this preference); 72% will rethink shaking hands with business contacts; 72% plan to schedule fewer in-person meetings; and 61% anticipate spending less time in common areas in the office.
Unsurprisingly, Robert Half, along with international staffing firms with a major U.S. presence such as Dutch company Randstad (RANJY) and Zurich-based Adecco (AHEXY) have seen declines in their respective shares of around 25%, 35% and 31.3% year-to-date in 2020.
IHS Markit noted that U.S. service providers registered the steepest decline in business activity since its data collection began ten-and-a-half years ago in March as the COVID-19 pandemic led to business closures and sharply reduced client demand for services from both businesses and households.
The final IHS Markit U.S. Services Business Activity Index registered 39.8 at the end of Q1 2020, which, although revised up from the ‘flash’ figure of 39.1, was down sharply from 49.4 in February. Many in the market think the level of the index in April could plunge to as low as 27, when released Tuesday, May 5.
Also Tuesday, Adecco is slated to announce its first quarter of 2020 financial results, and analysts generally foresee a drop in earnings to US$0.29 per share from US$0.85 EPS in the same year-ago quarter.
Investors will also be bracing for a slew of other salient economic data in the week ahead, including:
On the Economic Calendar:
Mon, May 4
- Factory Orders (Mar)
- Durable Goods (Mar – Final)
Tue, May 5
- Trade Balance (Mar)
- IHS Markit Services PMI (Apr)
- ISM Non-Manufacturing Index (Apr)
- American Petroleum Institute (API) Crude Oil Stocks
Wed, May 6
- ADP Employment (Apr)
- U.S. Energy Information Administration (EIA) Crude Oil Stocks
Thu, May 7
- Initial Jobless Claims (Weekly)
- Challenger Job Cuts (Apr)
Fri, May 8
- BLS Employment Situation (Apr)
- Wholesale Inventories (Mar)
In the meantime, select the Event Calendar option in the IBKR Trader Workstation for a full list of U.S. and global corporate events and earnings, dividend schedules, economic data, IPOs and more.
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