Daily Commentary BY THE CURVE TEAM –

Backward Step For US Jobs

21st of August, 2020

US initial jobless claims indicate the employment recovery will be arduous.

Since the April peak in initial jobless claims, those seeking the claims has been on the decline, albeit a slower decline for the last two months. Last week the number went under 1 million for the first time since the Covid inflicted peak.

This week’s latest number underdelivered to be 1.1 million despite an expected 0.9 million. These are new claims, which indicate employee turnover is still rife in the US.

The US economic recovery will be interesting to watch as Australia will have similar experiences. Jobless payments in the US are set to decrease from $600 a week to $300. Although not identical to Australia, we similarly will decrease our JobKeeper and JobSeeker payments as of October. The US changes will be implemented earlier than ours, so the impact that has in the US could be illustrative for Australia.

It will also be interesting to compare Australia’s JobKeeper policy to retain workers rather than the US simply beefing up its JobSeeker equivalent payment. Other countries in Europe such as Germany and the UK have implemented similar policies to Australia, with the aim of keeping employees connected to their employers so when the economy turns around re hiring can happen at a faster pace.

Retail sales has so far seen a boon from the wage subsidies. Despite household saving ratios up around 20% in Australia, retail sales are up 7.2% on pre-Covid levels. July numbers are out today, which will reflect the impact of Victoria going in to a Stage 3 lockdown.

Josh Stewart

Client Relationship Manager