Despite Increased US Consumer Spending, Employment Sluggish... New York Stock Market Declines

New Unemployment Claims Decrease by Only 10,000 Compared to Previous Week
Retail Sales Increase by 7.5%
Weakening of New York Stock Market After 5 Trading Days Due to Slow Improvement in Unemployment Situation

[Asia Economy New York=Correspondent Baek Jong-min] The resurgence of the novel coronavirus infection (COVID-19) has limited improvements in the U.S. labor market situation. Retail sales, a core component of the U.S. economy, recorded an increase for two consecutive months, but it still seems too early to be reassured. New York City fell for the first time in five trading days, reflecting concerns about the economic situation.

Job seekers are waiting in front of an employment agency in Nebraska, USA.
[Image source=AP Yonhap News]

The U.S. Department of Labor announced on the 16th (local time) that the number of new unemployment claims last week was 1.3 million. This is almost the same as the previous week's 1.31 million. It was higher than the expert forecast of 1.25 million and the decrease compared to the previous week was only 10,000.

Although it has been declining for 15 consecutive weeks, Bloomberg News reported that this is the smallest decrease since the unemployment crisis caused by COVID-19. The number of continued unemployment claims, which are filed for at least two weeks, decreased by 400,000 to 17.3 million.

Despite concerns from the labor market, the continued increase in consumption, which accounts for two-thirds of the U.S. economy, is somewhat reassuring.

The U.S. Department of Commerce announced that retail sales in June increased for the second consecutive month, rising 7.5% compared to the previous month. This is considered a better-than-expected result, exceeding the expert forecast of 5%. U.S. retail sales had previously recorded decreases of 8.3% in March and 14.7% in April. Retail sales account for about one-quarter of total consumer spending and are regarded as a key indicator showing the state of the U.S. economy.

A notable point in June retail sales is that although the increase slowed compared to May's 18.2%, it rose 1.10% compared to the same period last year. May retail sales had decreased by 5.65% compared to the same period last year.

Reflecting the normalization of economic activities, sales of automobiles, furniture, clothing and electronics, restaurants, and bars increased, but grocery stores and online commerce decreased.

However, the Wall Street Journal expressed concern that although June retail sales were strong, many places have re-imposed economic activity suspension measures due to the resurgence of COVID-19, so sales may decline again in July.

Concerns about the unemployment situation influenced the New York stock market, with major indices all starting lower. As of 10:30 a.m., the Dow Jones Industrial Average was down 0.22%, the S&P 500 was down 0.56%, and the Nasdaq was down 1.28%.