Exclusive: Unfazed by pandemic, Bank of Japan to keep economic recovery view – sources


TOKYO (Reuters) – The Bank of Japan is likely to maintain this month its projection that the economy will gradually recover from the damage wrought by the coronavirus pandemic in the latter half of this year, sources said.

A man wearing a protective mask stands in front of the headquarters of Bank of Japan amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan, May 22, 2020.REUTERS/Kim Kyung-Hoon

Such a view would reinforce market expectations that it will forgo bold monetary easing steps at its June rate review, after the BOJ and the government unveiled a slew of support measures for businesses in the last few months.

But it would contrast with the European Central Bank’s move on Thursday to offer a bigger-than-expected expansion of its stimulus package to prop up the economy.

The BOJ’s optimism reflects its growing conviction that the world’s third-largest economy hit bottom in April or May, when lockdown steps kept citizens home and businesses shut, said four sources familiar with the central bank’s thinking.

“There aren’t enough factors that would force the BOJ to alter its view the economy will emerge from the doldrums in latter half of this year as the pandemic subsides,” one of the sources said, a view echoed by three other sources.

That stance would reduce the likelihood of interest rate cuts or a massive increase in asset purchases at the BOJ’s June 15-16 rate review.

Still, many central bankers warn of risks that could slow the pace of recovery, such as a renewed spike in infections, rising job losses and a bigger-than-expected slump in emerging economies.

“The April-June quarter is probably the bottom for Japan’s economy. But the slump in growth may become bigger and the rebound slower than initially thought,” a second source said.

FUND AID, NOT STIMULUS

The BOJ eased monetary policy for two straight months in April, joining government efforts to cushion the blow from the pandemic on an economy already sliding into deep recession.

Steps so far have focused on easing corporate funding strains, such as increased purchases of corporate debt and the creation of lending facilities to help small firms.

While its U.S. and European counterparts are shifting from crisis response towards steps to reflate growth, the BOJ remains wary of using tools directly aimed at stimulating demand – such as rate cuts – too hastily, the sources said.

That means the BOJ’s most likely option, even if it were to act in coming months, would be to expand its lending facility or take new steps to ease stress on companies, they said.

“There’s no point trying to stimulate the economy now when the government is still asking people to stay home as much as possible to contain the pandemic,” a third source said.

Prime Minister Shinzo Abe announced a state of emergency in April requesting citizens to stay home and businesses to close, hammering an economy that was already suffering from the hit from a sales tax hike last year and the U.S.-China trade war.

While Japan lifted lockdown measures in May, analysts expect the economy to contract by an annualised 22% in the current quarter and recover only modestly in the second half of this year.

“Japan’s economy will rebound in July-September if there’s no renewed spike in infections. Even so, it may take until 2023 or 2024 for the economy to climb back to levels before the pandemic hit,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

“The BOJ may not need to act now. But if job losses start to spike, it may come under pressure to loosen policy again.”

Reporting by Leika Kihara and Takahiko Wada; Editing by Kim Coghill



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Global shares hit 3-month highs on economic recovery hopes By Reuters



© Reuters. Investors look at screens showing stock information at a brokerage house in Shanghai

By Elizabeth Howcroft

LONDON (Reuters) – World shares hit three-month highs on Wednesday and the dollar fell for the sixth day running as easing lockdowns and hopes for more monetary stimulus gave investors confidence, despite civil unrest in the United States and rising COVID-19 tolls.

The MSCI (NYSE:) world equity index, which tracks shares in 49 countries, rose to its highest since March 6, having gained throughout the Asian session.

The index is down more than 7% year-to-date, amid pandemic lockdowns that have pushed many economies into contraction.

MSCI’s main European Index also held near three-month highs and European bourses opened higher, with the up over 1% and back to levels not seen since March 6.

In China, Japan and South Korea, where COVID-19 is relatively contained, stock indexes have recovered substantially to be only about 5-6% below this year’s peaks.

There are some signs of recovery in business activity as governments restart their economies, albeit in the knowledge that easing lockdowns too early could trigger a second wave of COVID-19.

A closely-watched survey of service sector activity in China recovered to pre-epidemic levels in May.

Broader economic optimism supported risk-sensitive currencies and pushed down the dollar, which hit a three-month low against a basket of comparable currencies at around 0730 GMT.

“In a scenario where there’s no meaningful recurrence of the virus, and progress is made on treatments and vaccines, we expect the U.S. dollar’s weakness to continue,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

Oil rose on Wednesday, with Brent above $40 for the first time since March, as optimism mounted that major producers will extend output cuts and a recovery from the pandemic will spur demand for fuel.

futures for August were up around 1.8% at $40.27 a barrel, by 0730 GMT. U.S. West Texas Intermediate (WTI) crude futures gained $0.92, or 2.5%, to $37.73 a barrel, the highest since March 6.

fell 0.5% to around $1,717 per ounce.

STEEPENING U.S. YIELD CURVE

Germany’s ten-year government bond yield rose to its highest since mid-April as the global risk-on mood saw demand for safer debt decline, slipping back slightly to -0.386% by 0825 GMT.

The European Central Bank is expected to ramp up stimulative bond purchases when it meets on Thursday.

The euro, which rose above $1.12 for the first time in 11 weeks in early London trading, is on track for a seven-day winning streak against the dollar – its longest streak since December 2013.

The safe-haven Japanese yen hit a two-month low of 108.85 to the dollar before bouncing back to around 108.79 per dollar.

The U.S. Treasury yield curve steepened, partly reflecting the sale of more government debt to finance massive stimulus efforts.

The 30-year U.S. Treasuries yield rose to as high as 1.532%, its highest since mid-March, as expectations of central bank policy support kept shorter yields in check.

The yield gap between five- and 30-year Treasuries rose to 118 basis points, the highest since early 2017.

Tens of thousands of people defied U.S. curfews to take to the streets on Tuesday for an eighth night of protests over the death of a black man in police custody.

“The disconnect between what the average person sees happening in the world and what they see happening in the financial markets is getting wider and wider,” Marshall Gittler, head of investment research at BDSwiss, wrote in a note to clients.



Dollar Struggles Amid Rising Economic Optimism By Investing.com



© Reuters.

By Peter Nurse

Investing.com – The dollar has sold off in early European trade Monday, as fewer investors seek this safe haven amid rising optimism about the global economic recovery and as U.S. President Trump offers up a measured response to China’s move to tighten control over Hong Kong.

At 2:50 AM ET (0650 GMT), the , which tracks the greenback against a basket of six other currencies, stood at 97.957, down 0.4%, having touched an 11-week low of 97.877 earlier Monday. fell 0.2% to 107.59.

“Market participants believe that the worst of the health and financial and economic crises are now behind us. That’s supportive for commodity prices…and if we’re past the worst of it, then commodity currencies tend to do well and the U.S. dollar tends to do poorly in the early stages of a recovery,” Commonwealth Bank of Australia FX analyst Joe Capurso told CNBC.

The pair jumped 1.3% to 0.6748 and the pair was up 0.8% to 0.6248.

Helping the risk-on tone, an official business survey from China showed its factory activity grew at a slower pace in May but momentum in the services and construction sectors quickened.

Additionally, President Trump decided not to end phase one of the U.S.’s trade deal with China when he laid out his response to China’s national security law for Hong Kong and Macau on Friday, although he did vow to end Hong Kong’s special status.

traded at 7.1176, down 0.2%, with the yuan recovering slightly.

However, Goldman Sachs sees the yuan falling to its lowest since 2008 over the next three months amid uncertainty over U.S. policy toward China.

Goldman sees the yuan falling to 7.25 per dollar on a three month horizon before recovering toward 7.15 per dollar over six months and 7 per dollar in one-year. That’s up from targets of 7.15 per dollar, 7.05 and 6.90 previously.

The euro has continued to strengthen Monday, having been boosted by last week’s EU stimulus package.

Markets are also awaiting a meeting of the European Central Bank on Thursday where it is widely expected to raise its asset buying by around 500 billion euros to 1.25 trillion.

traded at 1.1140, up 0.4%, after climbing 1.8% last week.

Also on the rise is sterling, with the U.K. loosening months-long lockdown measures. The government announced the resumption of competitive sport from Monday.

Another round of Brexit talks get underway on Tuesday ahead of the June 18-19 EU summit by which time London needs to make up its mind about asking for an extension to the transition agreement.

traded at 1.2392, up 0.4%, after climbing 1.7% last week.

 

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German economic stimulus plan could be worth 75 billion – 80 billion



© Reuters.

FRANKFURT (Reuters) – Germany is working on a stimulus package worth 75 billion-80 billion euros ($83 billion-$89 billion) to support economic recovery after the coronavirus pandemic, weekly Bild am Sonntag reported.

Chancellor Angela Merkel’s coalition would stump up more than 60 billion euros, while the country’s regional states would shoulder the rest, the paper reported.

The government was not immediately available for comment.

Finance Minister Olaf Scholz from the co-governing Social Democrats (SPD) and Economy Minister Peter Altmaier from Merkel’s Christian Democrats (CDU) are expected to present the stimulus programme next week.

The scheme could include tax cuts, cash handouts to families, additional funds for small companies, debt relief for municipalities and subsidies for the car industry, according to proposals from various policy makers.

Europe’s largest economy is expected to plunge into its steepest recession since World War Two. The new fiscal stimulus package comes on top of a 750 billion-euro rescue package agreed in March.

Wolfgang Schaeuble, president of the German parliament, on Sunday called for the stimulus plan to focus on climate policy, digitization and innovation.

“It is crucial not just to announce large sums of money, but to do the right thing”, he told Frankfurter Allgemeine Sonntagszeitung (FAS).

“Some people think that climate policy must now take a back seat. But that cannot be seriously advocated,” he said, adding that cash incentives for new cars would be “unimaginative”.

He echoed comments from some industry groups which have spoken out against bonuses for new cars, after France introduced such a scheme.

The president of the VDMA association of German engineering firms, Carl Martin Welcker, told FAS: “Purchase premiums for cars and comparable individual subsidies discriminate against other products and generate windfall profits.”

($1 = 0.9011 euros)

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Hungary’s Orban `sceptical’ about EU economic rescue proposal By Reuters



© Reuters. Serbian President Vucic meets Hungarian PM Orban in Belgrade

BUDAPEST (Reuters) – Hungarian Prime Minister Viktor Orban on Friday said he was sceptical about the European Union’s planned 750 billion-euro economic stimulus plan, which he said was problematic both on the borrowing side and the distribution side.

Orban, who assumed office 10 years ago today, has often been at loggerheads with the EU, resisting supra-national policies on the grounds “Brussels was not Moscow”, referencing Communist rule.

Orban told public radio in an interview on Friday the EU stimulus package ignited “red lights in our heads” because it was a deviation from the EU’s normal financing method, when countries contribute the funds that are disbursed.

The European Commission introduced the plan on Wednesday, a step towards mutualised debt as a major funding tool and greater EU powers of taxation.

Major EU governments welcomed the plan.

Orban said the eurobonds would chart new territory in the course of EU integration, with EU states automatically vouching for each other’s debt.

“I don’t dismiss this off-hand, although my instincts keep me sceptical,” he said. “I propose we study it with cool composure, then decide whether we want to step on such a path, which could set Hungary’s future for decades.”

He also criticised the proposed distribution of the funds, which he said favoured wealthier nations.

“This new distribution system is an absurd and perverted solution, because it gives more to the rich than the poor, then what is the point of the whole exercise? Financing the rich from the coffers of the poor is not a good idea.”

Orban added that he would open a fresh round of “national consultation”, a mail-in survey of government questions, on the economic response to the economic crisis.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



White House to skip expected mid-year economic projections: Washington Post By Reuters




WASHINGTON (Reuters) – The White House will not release updated economic projections this summer, including one for the federal deficit, in a break with a long-standing practice, the Washington Post reported on Thursday, citing three people familiar with the move.

The so-called mid-session review typically includes updated projections on unemployment, inflation, economic growth and other economic trends. But economic volatility amid the ongoing novel coronavirus pandemic made such modeling difficult, two unnamed White House officials told the Post.

Representatives for the White House did not immediately reply to a request for comment on the report.

The outbreak, which has claimed more than 100,000 U.S. lives and infected more than 1.7 million people nationwide, has had devastating health consequences and shattered the economy. More than 40 million people have filed for unemployment benefits since March 21, although claims have declined steadily since hitting a record 6.867 million in late March.

The economic report is usually released by the White House every July or August following its proposed federal budget each February. But this year’s review will not include the economic projections, which budget experts told the Post had not been excluded since at least the 1970s, according to the report.

White House officials have pointed to projections by the non-partisan Congressional Budget Office for a sharp bounceback in growth the third quarter, but they have not addressed the CBO’s longer-term forecasts showing the economy still not fully healed by the end of 2021.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Wall Street rises with economic hopes; bank stocks jump


(Reuters) – U.S. stocks rose on Wednesday, with the S&P 500 closing above 3,000 for the first time since March 5, as the further easing of lockdowns lifted optimism for an economic recovery.

Bank stocks powered the day’s advance, with the S&P 500 financial index .SPSY leading gains among major sectors. The index rose nearly 10% over the past two sessions for its biggest two-day increase since April 8-9.

JPMorgan Chase & Co (JPM.N) was the leading point gainer in the financial index, rising 5.8% as the stock surged for a second day in a row. The bank’s chief executive, Jamie Dimon, said Tuesday he expects JPMorgan will boost its credit reserves again in the second quarter, but said there are signs the economy is regaining its footing.

After-the-bell on Wednesday, the head of JPMorgan’s corporate and investment banking division said second-quarter revenues are on track to be more than 50% higher than the same period last year.

Continued easing of lockdowns, optimism about an eventual COVID-19 vaccine and massive U.S. stimulus have been driving the market’s recent gains. On Wednesday, Walt Disney Co (DIS.N) announced plans to begin reopening its Walt Disney World resort in Florida, the world’s largest theme park, in phases beginning July 11, and MGM Resorts (MGM.N) said it would reopen its four Las Vegas casinos on June 4.

“It’s all about liquidity and the hopes that the economy will eventually do well,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“The rally will continue, but I don’t think it will continue without pullbacks,” he said, noting that weak second-quarter earnings could give investors a “reality check.”

Tech-related shares underperformed the broader market on Wednesday after leading the recent rally.

Traders wearing masks work, on the first day of in person trading since the closure during the outbreak of the coronavirus disease (COVID-19) on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 26, 2020. REUTERS/Brendan McDermid

The Dow Jones Industrial Average .DJI rose 553.16 points, or 2.21%, to 25,548.27, the S&P 500 .SPX gained 44.36 points, or 1.48%, to 3,036.13, and the Nasdaq Composite .IXIC added 72.14 points, or 0.77%, to 9,412.36.

Amid the recent gains, U.S. tensions with China have cast a cloud on markets.

President Donald Trump said Tuesday that Washington would announce its response to China’s planned national security legislation on Hong Kong before the end of the week. Secretary of State Mike Pompeo said Wednesday that Hong Kong no longer warrants special treatment under U.S. law as it did when it was under British rule, potentially a big blow to its status as a major financial hub.

Tech-related shares are among the most sensitive to Chinese growth, said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute in St. Louis.

“If the market is going to go higher from here, you’re going to have to have broader participation, but you are going to need those large-cap tech companies to be along for the ride because they make up such a large portion of the benchmark,” Samana said.

Also on Wednesday, the Federal Reserve’s Beige Book report showed that U.S. businesses continued to be hammered by the effects of the novel coronavirus epidemic into the middle of May.

Advancing issues outnumbered declining ones on the NYSE by a 3.81-to-1 ratio; on Nasdaq, a 2.21-to-1 ratio favored advancers.

The S&P 500 posted seven new 52-week highs and no new lows; the Nasdaq Composite recorded 41 new highs and 10 new lows.

Traders wearing masks work, on the first day of in person trading since the closure during the outbreak of the coronavirus disease (COVID-19) on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 26, 2020. REUTERS/Brendan McDermid

Volume on U.S. exchanges was 12.86 billion shares, compared to the 11.33 billion average for the full session over the last 20 trading days.

(This story has been refiled to delete extraneous words in 3rd paragraph)

Reporting by Caroline Valetkevitch; Additional reporting by Medha Singh and Susan Mathew in Bengaluru; Editing by Leslie Adler



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Czech card transaction jump gives glimpse of economic recovery By Reuters



© Reuters. FILE PHOTO: employee carrying flowerpots prepares an outdoor seating of a restaurant in Prague

PRAGUE (Reuters) – Card transactions at the Czech Republic’s second largest bank Ceska Sporitelna show consumer activity recovering to levels seen before the country’s coronavirus lockdown in March.

Bank data showed the volume of card transactions, including payments and ATM withdrawals, rose around 9% year-on-year in the last two weeks after dropping as much as 24% in the weeks after shops, restaurants and much of daily life shut in mid-March.

The Czech government has gradually lifted restrictions as new coronavirus cases stabilised below 100 a day through May and the death rate did not spike.

David Navratil, chief economist at Ceska Sporitelna said the card data showed swings across segments, including a 112% jump in hobby markets and a 91% drop at travel agencies, while electronics grew 47% and furniture 62%.

The bank, part of Austria’ Erste Group Bank (VI:), has 2.9 million active cards in the country of 10.7 million.

“It is positive Czechs did not fall into some depression, that they are not putting off purchases of necessary things and are not significantly increasing savings,” Navratil said.

A Statistics Office survey showed on Monday consumer confidence rebounded in May.

The Czech central bank has forecast the economy will shrink by a record 8% in 2020 before rebounding by 4% in 2021.

Czech unemployment, the lowest in the European Union going into the crisis, reached 3.4% in April, from 3.0% in March, but is expected to rise as factories struggle, which will hurt consumer demand.

Banks are prepared for more bad loans, but Navratil said measures to guarantee loans for businesses and a new short-term work programme modelled after Germany’s Kurzarbeit could limit the impact of the crisis if administered well.

If that happened, he said, “the recovery would not have to last as long as it seemed two weeks ago.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Australian PM calls for economic overhaul to fuel post-coronavirus recovery By Reuters


2/2

© Reuters. FILE PHOTO: Australian Prime Minister Morrison speaks during a joint press conference at Admiralty House in Sydney

2/2

By Colin Packham

SYDNEY (Reuters) – Australian Prime Minister Scott Morrison on Tuesday called for an ideological truce between employers and workers to revive the country’s A$2 trillion ($1.3 trillion) economy, which has been badly damaged by the coronavirus pandemic.

Australia’s more than 7,100 COVID-19 infections and 102 deaths are low compared to many other developed countries, but the measures imposed to contain the disease have pushed the economy to the brink of its first recession in 30 years.

Morrison said that with the virus now under control and the government’s A$250 billion ($164.5 billion) stimulus spending package winding down, the economy needed to stand on its own feet.

“At some point you’ve got to get your economy out of intensive care,” Morrison said in a speech in Canberra.

The conservative leader promised to bring together unions and business chiefs to discuss industrial relations reform, a move reminiscent of the 1983 Prices and Incomes Accord which modernised the economy under Labor prime minister Bob Hawke.

Hawke, a union leader before he entered parliament, won support from the political left to float the Australian dollar, remove controls on foreign exchange and interest rates and lower tariffs on imports.

The divide between employers and workers within Australia has grown in recent years amid stagnant wage growth, but with unemployment set to top 10% this year, Morrison said the time was right for a conciliatory approach.

“We need people to get together and sort this stuff out. As I say, they’ve been caught in grooves for too long, and grooves going in parallel lines and not coming together. And that’s why I’m hoping this process will achieve,” he said.

Morrison also said Australia would streamline its vocational training programmes to ensure trades are valued paths of employment for young people.

TENSIONS WITH THE STATES

When Morrison announced last week a three-staged plan to ease social distancing restrictions by July, he warned further coronavirus outbreaks were likely.

Western Australia (WA) state on Tuesday said six people aboard a livestock vessel that docked last week from the United Arab Emirates had tested positive for COVID-19, an outbreak the state government blamed on Morrison’s government.

WA Premier Mark McGowan said Australia’s Department of Agriculture gave permission for the vessel – carrying 48 people – to dock despite being aware some crew members were sick.

None of the crew had left the ship, he added.

Tensions between McGowan and Morrison are already high as WA refuses to open state borders – which risks delaying the opening of a travel link between Australia and New Zealand.

Life for many Australians is beginning to return to normal with schools returning to face-to-face learning and the National Rugby League competition set this week to become the world’s first contact sport to resume.

U.S. biotechnology company Novavax Inc (O:) said it had begun the first phase of a clinical trial of a novel coronavirus vaccine candidate in Australia. Preliminary results are expected in July.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



U.S. Jobless-Claims Data Become Much Trickier as Economic Gauge By Bloomberg



© Reuters. U.S. Jobless-Claims Data Become Much Trickier as Economic Gauge

(Bloomberg) — For decades, the U.S. jobless-claims report has provided a straightforward, routine read on the labor market every Thursday. Now it carries a variety of asterisks.

Two sizable reporting errors in as many weeks have inflated the U.S. Labor Department’s nationwide jobless-claims count and the number of applicants under a federal emergency program. On top of that, the report has been beset by data quirks stemming from filing schedules that vary from state to state, as well as seasonal adjustments that have been rendered less useful because of the explosion in layoffs during the coronavirus pandemic.

While it’s not uncommon for claims to be revised, nor will the latest complications alter the bleak and sudden deterioration in the labor market, the errors come at a time when economists and policy makers are attempting to get the best-possible handle on the pandemic’s damage to the economy and the pace of recovery.

“It’s clear you cannot overemphasize or overfocus on any one week of a data point for a particular state given the volatility that we have, given the backlogs that a lot of these states have had to work through,” said Matthew Luzzetti, chief U.S. economist at Deutsche Bank AG (NYSE:).

“As states begin to reopen, and as we’ve had this staggered reopening across different states, we will be looking at how that reopening is impacting the pace of improvement in claims,” Luzzetti said.

The latest report was marred by a data-entry error from the Massachusetts labor agency. An official from the state said in an email that it had 115,952 initial claims last week under the separate federal Pandemic Unemployment Assistance program, not the 1,184,792 shown in the U.S. Labor Department’s report.

That means nationwide claims under that program — which expands unemployment benefits to those not traditionally eligible, such the self-employed and gig workers — were actually about half of the reported 2.23 million figure. The U.S. Labor Department said it will incorporate the correction into next week’s report.

What Bloomberg’s Economists Say

“Jobless claims should continue to trend down. The pace of declines has been stubbornly slow, but could accelerate given there are tentative signs of small employers rehiring as the economy reopens.”

— Carl Riccadonna, Yelena Shulyatyeva, Andrew Husby and Eliza Winger

Read more: Bloomberg Economics’s week-ahead preview

A week earlier, Connecticut corrected its count to show 29,846 new claims for the regular state program from a previously reported 298,680, explaining most of a 294,000 downward revision in the U.S. Labor Department’s adjusted figure for the week ended May 9.

Initial jobless claims for regular state programs totaled 2.44 million in the week ended May 16, Labor Department figures showed Thursday. Since efforts to the contain Covid-19 pandemic rapidly shut down the economy in mid-March, about 38.6 million initial unemployment insurance claims have been filed under state programs. That’s roughly equivalent to all of the initial claims filed during the Great Recession, from December 2007 through June 2009.

Differences in how frequently people claim continued benefits in states is yet another reason why it’s become more difficult to get a precise read on week-to-week changes in the labor market at the state level. Economists are monitoring the number of Americans already on benefit rolls to gauge the breadth of the recovery in the labor market as states begin to reopen their economies.

Continuing Claims

These data are lagged by a week, and in the period ended May 9, the majority of states reported an unadjusted decline, a sign that reopenings are putting people back to work in many parts of the country. Yet, total continuing claims jumped an adjusted 2.5 million to a record 25.1 million. The increase was due largely to big unadjusted spikes in California and Florida, and the California rise owes in part to a biweekly filing cycle for aid recipients.

The enormous influx of claims has overwhelmed state unemployment offices. Florida, which has received more than 2 million total claims since March 15, has more than 200,000 filings in its queue awaiting verification. Backlogs have led to delays for millions of Americans across the country in receiving payments, as states scramble to keep up with the unprecedented number of claims.

Read more: Millions in U.S. Are On Edge, Waiting for Jobless Benefits

Errors and differing state reporting methods aside, some economists are looking to the raw numbers for a more accurate read on applications amid challenges with the federal agency’s seasonal adjustment process. On an non-seasonally adjusted basis, initial claims eased to 2.17 million last week from 2.36 million. Continuing claims on that basis totaled 22.9 million for the week ended May 9, up from 20.9 million.

“Given what’s going on is not part of any typical seasonal pattern or anything, I think the NSA data has given you probably a little bit better of a more accurate picture of what’s going on in the data,” Luzzetti said.

©2020 Bloomberg L.P.