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It’s jobs day! We’ll have a special edition of the newsletter after official U.S. employment numbers are out. First, Jeff Sparshott here with the latest on the economy.

Fresh Low, Still High

Filings for jobless benefits fell to their lowest level since the coronavirus hit the U.S. in March—a sign layoffs eased somewhat in a still struggling labor market. Initial unemployment claims fell by a seasonally adjusted 249,000 to 1.2 million for the week ended Aug. 1, the Labor Department said. While lower, the figure remained at a historically high level for the 20th straight week and well above the pre-pandemic record of 695,000 in 1982. The number of people receiving benefits through regular state programs, which cover the majority of workers, decreased to its lowest level since April, Eric Morath reports.

The decline in applications came as an extra $600 a week in pandemic-related unemployment benefits ended. Analysts were split on the degree to which the end of enhanced unemployment benefits caused the slight drop. Lawmakers and the White House continue to negotiate benefit levels as part of a broader stimulus package.

WHAT TO WATCH TODAY

U.S. nonfarm payrolls for June are expected to rise by 1.482 million from the prior month and the unemployment rate is expected to fall to 10.6% from 11.1%. (8:30 a.m. ET)

The Baker Hughes rig count is out at 1 p.m. ET.

U.S. consumer credit for June is out at 3 p.m. ET.

TOP STORIES

In Focus

Hiring gains are expected to have cooled in July, a sign of a slowing economic recovery amid rising coronavirus cases. Economists surveyed by The Wall Street Journal project payrolls grew by 1.5 million in July and forecast the unemployment rate dropped to 10.6% from 11.1% in June. Such job gains would signal the labor-market recovery continued, though at a weaker pace than in the previous two months. Before the coronavirus drove the U.S. into a deep recession this year, the unemployment rate was hovering around a 50-year low of 3.5%, Sarah Chaney reports.

Employers added more than 7 million jobs in May and June combined, as many states lifted lockdown restrictions on businesses. That partially offset the about 21 million jobs shed in March and April. “On balance, we’re still in a hole,” said Julia Coronado, economist at MacroPolicy Perspectives. “The pace of recovery has really been set back by the resurgence of the virus.”

Seller’s Market?

Foreign purchases of U.S. homes dropped to the lowest level since 2013, a boost for domestic buyers at a time when inventory has been tight. Chinese government control over foreign purchases, slowing global growth and a stronger dollar all contributed to the reduced foreign investment in U.S. housing, Nicole Friedman reports.

Alongside less competition from foreign purchasers, U.S. homebuyers are seeing record-low mortgage rates. Freddie Mac said a 30-year fixed-rate mortgage averaged 2.88% this week, the lowest in the survey’s history dating back to 1971.

But for new-home buyers, some commodity costs are rising. Lumber futures ended Thursday at a record high, propelled by a do-it-yourself remodeling boom and resurgent home builders. Prices have been sent soaring by saw mills that failed to anticipate the coronavirus pandemic setting off a building boom, Ryan Dezember reports.

Electric Avenue

Coronavirus shutdowns are shifting energy costs to individuals. Beginning in March, when businesses across the country snapped off the lights and sent employees home to curb the spread of Covid-19, overall electricity consumption declined. But household energy use surged, with some New York City apartments consuming, on average, 23% more electricity during business hours—a shift that, with the accompanying expense, could make things worse for those already suffering financially as a consequence of the pandemic, Jo Craven McGinty writes.

Taking Aim at China

The White House shot with both barrels at Sino-U.S. financial links Thursday, firing off a plan that could force Chinese companies to give up U.S. listings and executive orders restricting transactions related to ByteDance and Tencent Holdings, two major Chinese tech companies. The announcements are another big turn in the unwinding of a trans-Pacific commercial, financial and technological relationship built up over years, and a symbol of how quickly things are now deteriorating. The next couple of months particularly seem likely to bring even more, Mike Bird writes.

Despite rising political tensions between Washington and Beijing, American brands have suffered little commercial fallout among Chinese consumers, enabling them to capitalize on the economic rebound in China, Trefor Moss reports.

Global Demand Perks Up

German exports rose in June for the second consecutive month after suffering a record decline in April due to restrictions aimed at containing the coronavirus. And China’s exports posted a stronger-than-expected growth in July, as the gradual relaxation of lockdown policies in Europe and the U.S. boosted demand for Chinese goods.

Downfall

The pandemic has devastated hundreds of thousands of businesses across Latin America, setting back the clock on the social and economic gains made over the past two decades when a global commodities boom powered breakneck growth. From 2003 to 2019, poverty fell from 45% to 30% regionwide, and poor Latin Americans by the millions, poised on the threshold of middle-class life, took their first airline flight, bought their own homes and paid university tuitions for their children. Now Latin America’s economy is expected to contract 9.4% this year, according to the International Monetary Fund, the worst downfall on record for a region that was already wrestling with political turmoil and social unrest before it became a hot spot for Covid-19, Ryan Dube and Juan Forero report.

WHAT ELSE WE’RE READING

The direct economic cost of school closures in the U.K. will be minor to moderate. “However, the panel was unanimous that school closures will increase inequality, with a large majority of the panel predicting a persistent increase in inequality. The panel also predicted harm to gender equality, with many predicting persistent increases in inequality along gender lines,” economists said in a Center for Macroeconomics survey.

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