Virus surge linked to rise in joblessness in US

Initial US jobless claims rose for the first time in about four months as some states delayed or reversed reopening the economy amid an increase in the number of new coronavirus infections, the US Labor Department reported Thursday.

First-time jobless claims increased 109,000 for the week ended July 18 from the previous week to 1.416 million – the 18th consecutive week the total has been above 1 million. Economists surveyed by Dow Jones expected 1.3 million initial unemployment claims to be filed.

"After a dire start to the second quarter in April, the global economy has since staged a robust rebound as lockdown restrictions in many regions have been eased," Oxford Economics, a global forecasting company based in England, said in a research report.

"Despite a strong initial bounce, high unemployment and surging corporate debt will limit the scale of the revival in (the second half of 2020) and beyond. The renewed rise in COVID-19 cases in parts of the world shows that considerable downside risks remain."

The number of confirmed coronavirus cases in the US is approaching 4 million, and about 140,000 people have died after being infected, Johns Hopkins University reported.

The seasonally adjusted unemployment rate was 11.1 percent for the week ended July 11, a 0.7 percentage-point decline from the previous week's revised rate.

In the last few weeks, the number of initial jobless claims has hovered around 1.3 million a week after declining steadily from the peak of 6.9 million claims filed in late March.

The current number of initial jobless claims is well above the previous record high of 695,000 set in 1982.

Continuing claims, or those of people receiving benefits for at least two consecutive weeks, declined by 1.107 million to 16.197 million for the week ended July 11, the Labor Department said.

The extra $600-a-week benefit expires at the end of July, and Congress is debating another coronavirus aid package.

Democrats argue that the money is needed to help people meet routine living expenses, but Republicans counter that the enhanced benefit may be a disincentive for some to return to work and therefore could slow the recovery.

In an interview with CNBC, Treasury Secretary Steven Mnuchin said the Republican proposal would extend the enhanced unemployment benefit "based on approximately 70 percent wage replacement".

But it's not clear how the Republican plan would be structured. Congress included the $600 a week in the aid package passed in March because it didn't appear all state computer systems could accurately calculate a percentage increase for individual claimants.

Mnuchin also said that US President Donald Trump's proposal to temporarily suspend payroll taxes won't be included in the Republican bill.

In an interview with CNBC, House Majority Leader Steny Hoyer, a Democrat from Maryland, said replacing 70 percent of lost wages isn't "the policy we ought to pursue".

He said any cuts "ought to be over time" but noted the Republican proposal is "not a deal-breaker".

Republicans believe the next coronavirus relief package should total about $1 trillion. But House Speaker Nancy Pelosi, a Democrat from California, believes that is not enough to meet economic problems caused by the pandemic.

The economy may continue to weaken.

On Thursday, Southwest Airlines reported a $915 million second-quarter loss compared with a $741 million profit for the same period a year ago.

Revenue plunged about 83 percent to just over $1 billion from $5.9 billion a year ago.

Demand for air travel has weakened in the last few weeks after ticket sales had begun to recover this spring.

In response, the airline said it may reduce third-quarter capacity 20 to 30 percent compared with last year.

"We were encouraged by improvement in May and June leisure passenger traffic trends, compared with March and April," Gary Kelly, Southwest's CEO, said in a statement.

"However, the improving trends in revenue and bookings have recently stalled in July with the rise of COVID-19 cases. We expect air travel demand to remain depressed until a vaccine or therapeutics are available."

AMC Entertainment Holdings, the largest US movie theater chain, said it has set aside plans to reopen this month and now hopes to begin showing movies in August.

The company said it had reached an agreement earlier this month to keep the company solvent through 2021.