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U.S. job growth roars back, but COVID-19 resurgence spells trouble ahead

WASHINGTON (Reuters) – The U.S. economy created jobs at a record clip in June as more restaurants and bars reopened, but 31.5 million Americans were collecting unemployment checks in the middle of the month, and a resurgence in COVID-19 cases suggested the labor market could suffer a setback in July.

Record spikes in new coronavirus infections in large parts of the country, including the highly-populated states of California, Florida and Texas, have forced several states to scale back or pause reopenings, and send some workers back home.

The flare-up in the respiratory illness, which started in late June and hit bars and restaurants hard, was not captured in the Labor Department’s closely watched monthly employment report published on Thursday because the government surveyed businesses in the middle of the month.

“June may be the calm before the storm,” said Chris Rupkey, chief economist at MUFG in New York. “We cannot be sure the labor market recovery will continue at a speed that is sufficient to put the millions and millions of Americans made jobless in this recession back to work.”

Nonfarm payrolls surged by 4.8 million jobs in June, the largest gain since the government started keeping records in 1939. Payrolls rebounded 2.699 million in May after a historic plunge of 20.787 million in April. Economists polled by Reuters had forecast payrolls would increase by 3 million jobs in June. Still, employment is 14.7 million jobs below its pre-pandemic level.

President Donald Trump, whose opinion poll numbers have tanked as he struggles to manage the pandemic, economic crisis and protests over racial injustice four months before the Nov. 3 election, hailed the job gains as proof “our economy is roaring back.”

Though the second straight month of strong hiring added to a stream of data, including consumer spending, in suggesting that the recession which started in February was likely over, that is all in the rear-view mirror as COVID-19 cases soar.

Federal Reserve Chair Jerome Powell this week said the economic outlook “is extraordinarily uncertain” and would depend on “our success in containing the virus.”

Hiring last month was boosted by the typically low-paying leisure and hospitality industry, which brought back 2.1 million jobs, accounting for about two-fifths of the rise in payrolls. But the return of these workers pushed down average wages 1.2% in June. Companies also cut wages and hours. The average workweek dropped to 34.5 hours from 34.7 hours in May.

The measurement of the unemployment rate continued to be biased down by people incorrectly misclassifying themselves as being “employed but absent from work” last month.

Related Coverage

  • Amid strong June job growth, signs U.S. recovery may be stumbling
  • U.S. trade deficit widens as exports fall to lowest level since 2009

The jobless rate fell to 11.1% in June from 13.3% in May. The Labor Department’s Bureau of Labor Statistics, which compiles the employment report, said the unemployment rate would have been 12.1% without the misclassification problem. The rate is 7.6 percentage points above its February level.

Stocks on Wall Street rallied, with the Nasdaq hitting an all-time high. The dollar .DXY edged up against a basket of currencies. U.S. Treasury prices were mixed.

BROAD JOB GAINS

Jobs also returned in the retail, education and health, manufacturing, construction, professional and business services sectors, transportation and warehousing, wholesale trade and financial activities sectors.

Local governments hired teachers and support staff. But state governments, confronting reduced revenues and stressed budgets caused by the pandemic, laid off more workers. There were further job losses in mining.

Economists have attributed the burst in job gains to the government’s Paycheck Protection Program, giving businesses loans that can be partially forgiven if used for wages. Those funds are drying up and many companies, including some not initially impacted by lockdown measures, are struggling with weak demand, forcing them to lay off workers.

Economists and industry watchers say this, together with the exhaustion of the PPP loans, has triggered a new wave of layoffs, that is keeping weekly new applications for unemployment benefits extraordinarily high.

In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits fell 55,000 to a seasonally adjusted 1.427 million for the week ended June 27. Including a program funded by the federal government, 2.3 million people applied for benefits last week.

The number of people receiving benefits after an initial week of aid rose 59,000 to 19.290 million in the week ending June 20. These so-called continued claims, which are reported with a one-week lag.

There were 31.5 million people collecting unemployment checks in mid-June, up 916,722 from the first week of the month.

With the measurement of the unemployment rate continuing to be distorted since March, economists recommend focusing on continuing claims and data on the total number of unemployment checks recipients to get a better view of the labor market.

“The risks to the labor market are clearly tilted to the downside,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics in New York.

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State Department warns top U.S. firms over supply chain risks linked to China's Xinjiang

WASHINGTON (Reuters) – The U.S. State Department warned top American companies including Walmart Inc(WMT.N), Apple Inc (AAPL.O)and Amazon.com Inc(AMZN.O) over risks faced from maintaining supply chains associated with human rights abuses in China’s western Xinjiang province, according to a letter seen by Reuters on Friday.

“It is critical that U.S. companies and individuals be aware of the large-scale human rights abuses perpetrated by the PRC government in Xinjiang,” Keith Krach, Undersecretary of State for economic growth, energy and the environment wrote on July 1.

“Businesses should evaluate their exposure to the risks that result from partnering with, investing in, and otherwise providing support to companies that operate in or are linked to Xinjiang,” he said in the letter also sent to trade groups.

The United States is seeking to ratchet up pressure on China at a time of heightened tensions over that country’s treatment of Muslim Uighurs in Xinjiang and Beijing’s new national security law for Hong Kong.

It also follows a Wednesday advisory by the U.S. government that said companies doing business in Xinjiang or with entities using Xinjiang labor could be exposed to “reputational, economic, and legal risks”.

In a call with reporters, Krach said the complex nature of supply chains was making companies vulnerable to potential risks and urged them to be more vigilant. “It’s incumbent on the board of directors for each company to conduct a detailed analysis of their supply chains to reveal who their company is buying from and who it is selling to,” he said.

He did not give specific number on how many U.S. companies might have been entangled in such supply chains.

The United Nations estimates that more than a million Muslims have been detained in camps there. China has denied mistreatment and says the camps provide vocational training and help fight extremism.

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Record job growth powers Wall Street, Nasdaq hits all-time high

(Reuters) – Wall Street opened higher on Thursday, with the Nasdaq hitting an all-time high as data showed the U.S. economy added jobs at a record pace in June, the latest signal of a rebound in business activity following the easing of coronavirus-led lockdowns.

Nonfarm payrolls rose by 4.8 million jobs in June, the Labor Department’s closely watched monthly employment data showed, the most since the government began keeping records in 1939, although a recent surge in COVID-19 cases has threatened the fledgling recovery.

All 11 major S&P sectors were trading higher and gains were led by financials, basic materials and energy stocks.

“The strong rebound would normally be an unambiguously positive sign that a recovery is under way (but) it is being accompanied by a sharp rise in new infections, which was what caused the collapse in the first place,” said Mike Bell, global market strategist at JP Morgan Asset Management in London.

“It is therefore too soon to say for certain that this recovery in employment sounds the all-clear for investors.”

Several states are scaling back or pausing reopenings to tackle the spike in infections and analysts have warned of another selloff in financial markets if the damage to Corporate America mounts.

Third-quarter earnings for S&P 500 companies are now expected to tumble 25%, compared with a forecast of a 2.7% drop on April 1, according to Refinitiv data. In the second quarter, earnings are forecast to have plunged 43%.

“People are less concerned about earnings than they are about the guidance and what companies say about the next six months and 2021,” said Thomas Hayes, managing member at Great Hill Capital Llc in New York.

At 10:10 a.m. ET, the Dow Jones Industrial Average was up 431.49 points, or 1.68%, at 26,166.46, the S&P 500 was up 46.08 points, or 1.48%, at 3,161.94, and the Nasdaq Composite was up 147.27 points, or 1.45%, at 10,301.90.

Tesla Inc jumped 8.5% and was set for a fourth straight session of gains after beating Wall Street estimates for second-quarter vehicle deliveries.

Travel-related stocks were also among the biggest gainers, with cruise line operators Carnival Corp, Royal Caribbean Cruises Ltd and Norwegian Cruise Line Holdings Ltd rising more than 2%.

Coty Inc added 5.3% after it named former top executive of L’Oreal, Sue Nabi, as its chief executive officer.

Advancing issues outnumbered decliners more than 8-to-1 on the NYSE and 3-to-1 on the Nasdaq.

The S&P index recorded 30 new 52-week highs and no new low, while the Nasdaq recorded 84 new highs and six new lows.

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Egg salad and a basketball star provide one California cafe's coronavirus lifeline

OAKLAND, Calif. (Reuters) – Each day, employees at Farley’s East cafe in Oakland, California fix about 200 turkey, ham and egg salad sandwich lunch plates to be distributed free to the homeless, hungry school-age kids, medical professionals at Covid-19 testing sites, and others in need.

It’s a community lifeline as new coronavirus cases and unemployment continue in the Bay Area, leaving parents struggling to feed their families and the unsheltered facing even more uncertainty.

Funded in the San Francisco Bay area through donors like Golden State Warriors’ Stephen Curry and wife Ayesha, and Twitter CEO Jack Dorsey, the program is expected to continue through the summer.

It’s also a big reason the cafe, which more typically trades in $4.50 lattes and $12.95 whole health protein bowls, is still in business. Reuters has been following the cafe since mid-March, when it closed after the Bay Area imposed the nation’s first regional stay-at-home order.

Downtown Oakland office buildings are still empty because many of the city’s corporate workers are doing their jobs at home, and others have joined the surging ranks of the metro region’s more than 300,000 unemployed. Since the eatery reopened in late April, sales to individual customers are about 30% of its pre-crisis norm, says co-owner Chris Hillyard.

But the lunch order from World Central Kitchen (WCK), a Washington DC-based nonprofit that has organized community food giveaways with 2,000 restaurants nationally since the pandemic began, adds back another 30%.

“It’s a huge help being able to do these meals,” Hillyard says. The World Central Kitchen has spent $55 million on its program since it began in March. Without the extra income, Hillyard said, “we’d be thinking about closing – we would be going into debt without it.”

In Oakland, WCK is ordering from 100 restaurants including Farley’s, injecting $700,000 weekly into the local economy, according to WCK’s CEO Nate Mook. Plans call for expanding to another 100 local eateries.

Farley’s East has had other help as well. In April, the cafe received a $221,000 payroll protection loan, one of 4.7 million distributed in a $660 billion program created by Congress in late March. The money helps pay for the 16 employees Hillyard has rehired, as well as rent and some other overhead charges.

Recent changes to the terms of program give the cafe six months rather than eight weeks to spend the money.

California’s reopening after the shutdowns imposed in March has meant a return of some economic activity, but also a rise in infections. Reuters is chronicling the journey of several small businesses owners around the U.S. as they navigate the pandemic.

Despite the uncertainty, Hillyard says he’s found a measure of stability,

“Right now we are kind of wait and see,” Hillyard says. If employees of Kaiser Permanente, Xirius XM’s Pandora and other firms return to their nearby offices, “we are going to be okay.”

But “if things aren’t changing come the fall, then we’ll have to reassess things and think about what major changes we have to make,” Hillyard says. “We need customers – no amount of grants or loans is going to save us.”

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Fed's Bullard warns of financial crisis risks as virus cases spike: FT

(Reuters) – St. Louis Federal Reserve Bank president James Bullard has warned that a growing number of bankruptcies due to the coronavirus outbreak could lead to a financial crisis, the Financial Times reported.

“Without more granular risk management on the part of the health policy, we could get a wave of substantial bankruptcies and (that) could feed into a financial crisis,” Bullard said in an interview with the newspaper on Wednesday. (on.ft.com/31AlcUF)

He warned of “twists and turns” in the health crisis and said “it’s probably prudent to keep our lending facilities in place for now, even though it’s true that liquidity has improved dramatically in financial markets.”

New U.S. COVID-19 cases rose by nearly 50,000 on Wednesday, according to a Reuters tally, marking the biggest one-day spike since the start of the pandemic. The surge in cases across the country, including the populous states of California, Florida and Texas, threaten the budding recovery.

Bullard said that it is possible that the country could “take a turn for the worse at some point in the future”, but added that it was not his base case, according to the report.

The Fed moved aggressively in March to support the U.S. economy by cutting rates to near zero, buying up trillions of dollars in bonds and launching a slate of emergency lending tools to keep credit flowing to households and businesses.

The last of those programs was launched on Monday, which the Fed can use to buy newly minted corporate bonds.

“With all these programmes, the idea is to make sure the markets don’t freeze up entirely, because that’s what gets you into a financial crisis, when traders won’t trade the asset at any price,” Bullard added.

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Record U.S. job growth expected in June, but masks labor market weakness

WASHINGTON (Reuters) – The U.S. economy likely created jobs at a record clip in June as more restaurants and bars resumed operations, which would offer further evidence that the COVID-19 recession was probably over, though a surge in cases of the coronavirus threatens the fledgling recovery.

The Labor Department’s closely watched monthly employment report on Thursday would add to a stream of data, including consumer spending, showing a sharp rebound in activity.

But the reopening of businesses after being shuttered in mid-March has unleashed a wave of coronavirus infections in large parts of the country, including the populous California, Florida and Texas.

Several states have been scaling back or pausing reopenings since late June and sent some workers home. The impact of these decisions will not show up in the employment data as the government surveyed businesses in the middle of the month.

Federal Reserve Chair Jerome Powell this week acknowledged the rebound in activity, saying the economy had “entered an important new phase and (had) done so sooner than expected.” But he cautioned the outlook “is extraordinarily uncertain” and would depend on “our success in containing the virus.”

“As the economy is reopening a lot of the jobs lost have come back and activity is coming back as well,” said Steven Blitz, chief U.S. economist at TS Lombard in New York. “The problem is the virus still has a big say in determining the trajectory of the recovery.”

According to a Reuters survey of economists, nonfarm payrolls likely increased by 3 million jobs in June, which would be the most since the government started keeping records in 1939. Payrolls rebounded 2.5 million in May after plunging by a historic 20.687 million in April.

Despite two straight months of eye-popping gains, employment would still be about 16.6 million jobs below its pre-pandemic level. The unemployment rate is forecast dipping to 12.3% from 13.3% in May.

Employment is increasing largely as companies rehire workers laid off when non-essential businesses like restaurants, bars, gyms and dental offices among others were closed to slow the spread of COVID-19.

Economists have attributed the burst in job gains to the government’s Paycheck Protection Program, giving businesses loans that can be partially forgiven if used for wages. Those funds are drying up.

LAYOFFS STILL ELEVATED

In an economy that had already fallen into recession as of February, many companies, including some not initially impacted by lockdown measures, are struggling with weak demand.

Economists and industry watchers say this, together with the exhaustion of the PPP loans, has triggered a new wave of layoffs that is keeping weekly new applications for unemployment benefits extraordinarily high.

A separate report from the Labor Department on Thursday is expected to show initial claims for state unemployment benefits likely totaled a seasonally adjusted 1.355 million for the week ended June 27 down from 1.48 million in the prior week, according to another Reuters survey of economists.

“Job losses are starting to bleed to other sectors of the economy, income groups and different skill sets,” said Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pennsylvania.

The claims report is also expected to show the number of people receiving benefits after an initial week of aid likely fell to 19 million in the week ending June 20 from 19.5 million the week before. These so-called continued claims, which are reported with a one-week lag, have dropped from a record 24.912 million in early May.

For a more accurate picture of the labor market, economists recommend focusing on continuing claims and data on the total number of unemployment checks recipients. About 30.6 million people were collecting unemployment checks in the first week of June.

The jobless rate, which is the more standard measure of unemployment, has been biased down since March by people incorrectly misclassifying themselves as “employed but absent from work.” The Labor Department’s Bureau of Labor Statistics has been working with the Census Bureau to rectify this.

Without the misclassification issue, the unemployment rate would have been 16.3% in May instead of 13.3% and would have peaked at about 19.7% in April.

Job gains last month were likely concentrated in the typically low paying leisure and hospitality industry. The return of these workers is expected to have further depressed average wages in June. Some companies are cutting wages and reducing hours. Average hourly earnings are forecast declining 0.7% after dropping 1.0% in May. The average workweek is expected to dropped to 34.5 hours from 34.7 hours.

States and local governments likely laid off more workers as they confront reduced revenues and stressed budgets caused by the pandemic.

“A federal government failure to aid state and local governments and avoid income cliffs over the summer would further jeopardize the recovery,” said Lydia Boussour, a senior U.S. economist at Oxford Economics in New York.

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Energy Transfer digs in on North Dakota pipeline expansion despite oil slump, sources say

NEW YORK (Reuters) – U.S. pipeline company Energy Transfer has taken the rare step of invoking force majeure – normally used in times of war or natural disaster – to prevent oil firms from walking away from a proposed expansion of the controversial Dakota Access pipeline, according to two sources familiar with the matter.

Energy Transfer wants to nearly double the size of the line, and some companies that signed up say it is no longer necessary due to the sharp fall in U.S. oil production after the coronavirus pandemic. North Dakota is one of the costliest spots in the United States to produce crude, and its output has dropped by about one-third from last year, more than most other oil-producing states.

DAPL is the largest pipeline running out of North Dakota’s Bakken shale basin. It has capacity to ship 570,000 barrels per day (bpd) of crude to its endpoint in Illinois. Users say an expansion to 1.1 million bpd is unlikely to be filled because the state’s production is not expected to rebound soon.

“Honestly, DAPL is not needed,” said one customer who committed to space on the expanded line, speaking on condition of anonymity. “They’re trying to build a house that all these people signed up for. Even if there’s no longer a need for the house, you can’t really walk away from it. Would I like to get out? Yes, for sure.”

Energy Transfer, however, has invoked force majeure because it could not get the permits by a certain date, according to one shipper on the line and another familiar with the declaration. That buys the company more time to get regulatory approvals and prevents customers from walking away from their commitments.

The company declined to comment on the force majeure. Energy Transfer spokeswoman Lisa Coleman reiterated previous company statements that it has received enough interest to increase the pipeline’s capacity.

Pipelines are generally built after companies find customers willing to commit to shipping oil. That helps pipeline builders to line up financing for such projects, which take years to complete. Contracts to use future pipeline space usually allow customers to walk away from those agreements when substantial delays occur.

In an April filing with Illinois regulators, Energy Transfer said that “not one shipper has sought to withdraw from an existing agreement” despite the oil downturn and that demand exceeds DAPL’s current capacity. The company said in legal filings that the downturn is temporary.

North Dakota’s production has dropped by 450,000 bpd, down from a peak of nearly 1.5 million bpd reached last year, according to the Energy Information Administration’s data.

The expanded line is currently expected to enter service in late 2021.

At least a half-dozen U.S. oil pipeline projects have been put on hold indefinitely so far this year, according to U.S. Energy Department data. U.S. production has dropped from a record 12.9 million bpd in late 2019 to roughly 11 million bpd.

OPPOSITION IN ILLINOIS

DAPL drew thousands of people to North Dakota in 2016 in support of Native American tribes and environmental groups protesting the line’s initial construction. It eventually started in mid-2017 after months of delays.

To expand the line, Energy Transfer needs approval from regulators in North Dakota, South Dakota, Iowa and Illinois.

The first three have said yes, but environmental groups brought numerous legal challenges in Illinois starting a year ago. They argued the application was improperly filed and that an expansion increases the risk of large-scale leaks. The challenges may force the company to resubmit its application.

“They’re in force majeure right now because they did not get the permits,” one source with direct knowledge of the matter said.

An administrative law judge in Illinois could issue findings on the legal dispute as early as this month, though there is no timeline for that report. Once those findings are released, and both Energy Transfer and the opposition respond, the Illinois Commerce Commission will vote on whether the expansion can go forward. That vote has not been scheduled.

Even if producers wanted to fight Energy Transfer’s declaration of force majeure, they may be hesitant to initiate legal action due to the time and cost involved, said Ted Borrego, who has practiced oil and gas law for over 45 years and teaches at the University of Houston Law Center.

“Rarely will you see a shipper trying to bail out of a contract,” he said.

DAPL customers such as Hess Corp and refiner Marathon Petroleum, which invested in the original DAPL project, declined to comment specifically on any contractual agreements on DAPL or on the proposed expansion. Continental Resources, another large Bakken producer, did not respond to requests for comment.

“Hess believes that DAPL has and will continue to be a critical piece of U.S. energy infrastructure, which allows for transportation of crude oil into expanded domestic markets in the U.S. and abroad,” company spokesman Rob Young said.

Bakken crude producers generally break even on drilling at a price of about $46.50 a barrel, according to Deutsche Bank analysts, higher than other parts of the country. The U.S. crude oil benchmark is trading just below $40, after averaging just $17.50 in April and $33.70 in May.

While output in North Dakota has rebounded somewhat from its fall in May to less than 1 million bpd, production is expected to remain lower than its peak.

“At the moment I don’t think the demand is there from shippers for more DAPL, given the decline in Bakken output,” said Sandy Fielden, director of oil and products research at Morningstar in Austin, Texas.

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Record U.S. job growth expected in June, but masks labor market weakness

WASHINGTON (Reuters) – The U.S. economy likely created jobs at a record clip in June as more restaurants and bars resumed operations, which would offer further evidence that the COVID-19 recession was probably over, though a surge in cases of the coronavirus threatens the fledgling recovery.

The Labor Department’s closely watched monthly employment report on Thursday would add to a stream of data, including consumer spending, showing a sharp rebound in activity.

But the reopening of businesses after being shuttered in mid-March has unleashed a wave of coronavirus infections in large parts of the country, including the populous California, Florida and Texas.

Several states have been scaling back or pausing reopenings since late June and sent some workers home. The impact of these decisions will not show up in the employment data as the government surveyed businesses in the middle of the month.

Federal Reserve Chair Jerome Powell this week acknowledged the rebound in activity, saying the economy had “entered an important new phase and (had) done so sooner than expected.” But he cautioned the outlook “is extraordinarily uncertain” and would depend on “our success in containing the virus.”

“As the economy is reopening a lot of the jobs lost have come back and activity is coming back as well,” said Steven Blitz, chief U.S. economist at TS Lombard in New York. “The problem is the virus still has a big say in determining the trajectory of the recovery.”

According to a Reuters survey of economists, nonfarm payrolls likely increased by 3 million jobs in June, which would be the most since the government started keeping records in 1939. Payrolls rebounded 2.5 million in May after plunging by a historic 20.687 million in April.

Despite two straight months of eye-popping gains, employment would still be about 16.6 million jobs below its pre-pandemic level. The unemployment rate is forecast dipping to 12.3% from 13.3% in May.

Employment is increasing largely as companies rehire workers laid off when non-essential businesses like restaurants, bars, gyms and dental offices among others were closed to slow the spread of COVID-19.

Economists have attributed the burst in job gains to the government’s Paycheck Protection Program, giving businesses loans that can be partially forgiven if used for wages. Those funds are drying up.

LAYOFFS STILL ELEVATED

In an economy that had already fallen into recession as of February, many companies, including some not initially impacted by lockdown measures, are struggling with weak demand.

Economists and industry watchers say this, together with the exhaustion of the PPP loans, has triggered a new wave of layoffs that is keeping weekly new applications for unemployment benefits extraordinarily high.

A separate report from the Labor Department on Thursday is expected to show initial claims for state unemployment benefits likely totaled a seasonally adjusted 1.355 million for the week ended June 27 down from 1.48 million in the prior week, according to another Reuters survey of economists.

“Job losses are starting to bleed to other sectors of the economy, income groups and different skill sets,” said Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pennsylvania.

The claims report is also expected to show the number of people receiving benefits after an initial week of aid likely fell to 19 million in the week ending June 20 from 19.5 million the week before. These so-called continued claims, which are reported with a one-week lag, have dropped from a record 24.912 million in early May.

For a more accurate picture of the labor market, economists recommend focusing on continuing claims and data on the total number of unemployment checks recipients. About 30.6 million people were collecting unemployment checks in the first week of June.

The jobless rate, which is the more standard measure of unemployment, has been biased down since March by people incorrectly misclassifying themselves as “employed but absent from work.” The Labor Department’s Bureau of Labor Statistics has been working with the Census Bureau to rectify this.

Without the misclassification issue, the unemployment rate would have been 16.3% in May instead of 13.3% and would have peaked at about 19.7% in April.

Job gains last month were likely concentrated in the typically low paying leisure and hospitality industry. The return of these workers is expected to have further depressed average wages in June. Some companies are cutting wages and reducing hours. Average hourly earnings are forecast declining 0.7% after dropping 1.0% in May. The average workweek is expected to dropped to 34.5 hours from 34.7 hours.

States and local governments likely laid off more workers as they confront reduced revenues and stressed budgets caused by the pandemic.

“A federal government failure to aid state and local governments and avoid income cliffs over the summer would further jeopardize the recovery,” said Lydia Boussour, a senior U.S. economist at Oxford Economics in New York.

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U.S. warns firms of human rights abuse risks in China's Xinjiang province

WASHINGTON (Reuters) – The United States on Wednesday issued an advisory warning U.S. companies about the risks faced from maintaining supply chains associated with human rights abuses in China’s western Xinjiang province.

The advisory, issued by the U.S. State, Treasury, Commerce and Homeland Security departments, seeks to add more U.S. pressure on China at a time of heightened tensions over China’s treatment of Muslim Uighurs in Xinjiang and Beijing’s new national security law for Hong Kong.

The advisory said companies doing business in Xinjiang or with entities using Xinjiang labor face “reputational, economic, and legal risks” from human rights abuses, including forced labor, mass detention and forced sterilization.

“CEOs should read this notice closely and be aware of the reputational, economic and legal risks of supporting such assaults on human dignity,” U.S. Secretary of State Mike Pompeo told reporters on Wednesday.

U.S. Customs and Border Protection officers earlier on Wednesday detained a shipment originating in Xinjiang of hair products and accessories suspected of being forced labor products made with human hair, the agency said in a statement.

The products, part of a shipment of almost 13 tons of hair products worth over $800,000, indicated potential human rights abuses of forced child labor and imprisonment, the statement said.

“The production of these goods constitutes a very serious human rights violation, and the detention order is intended to send a clear and direct message to all entities seeking to do business with the United States that illicit and inhumane practices will not be tolerated in U.S. supply chains,” Brenda Smith, a senior Customs and Border Protection official, said in the statement.

The U.S. Commerce Department last month added seven companies and two institutions to an economic blacklist for being “complicit in human rights violations and abuses committed in China’s campaign of repression, mass arbitrary detention, forced labor and high-technology surveillance against Uighurs” and others.

China’s ambassador to the U.N. in Geneva, Chen Xu, told the U.N. Human Rights Council in Geneva on Wednesday that Beijing categorically rejects what he called “groundless accusations against China on the Hong Kong and Xinjiang issues” made by some countries due to political motives.

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Fed deluged by letters from needy over U.S. loan program

(Reuters) – The U.S. Federal Reserve on Wednesday released thousands of letters and emails from individuals, businesses and nonprofit groups this spring urging wider access to its Main Street Lending Program for Americans slammed financially during the pandemic.

The central bank announced the Main Street program in late March, offering loans to mostly medium-sized businesses with up to 15,000 employees or revenues up to $5 billion.

It asked for public feedback and got plenty. Correspondence poured in from a diverse cross-section of Americans reeling economically and in need of funds to tide them over. The Fed incorporated some of the suggestions into the planned program, which launched in mid-June but had yet to make a loan as of last week.

There were earnest pleas to make funds available to organizations that had originally been excluded. There were also glib requests for the Fed to just send money.

“Print me out $200,000,000,000,000.00 ($200 trillion),” wrote one correspondent whose name was withheld.

The writers included school-meal providers, the American Hospital Association, a tuxedo rental company, the U.S. Olympic & Paralympic Committee, local YMCAs and the California State University system. Requests also came from energy providers, Dallas hotel magnate Monty Bennett, and advocates for the needs of felons.

It paints a picture of a central bank, which once closely guarded its secrets, newly open to public feedback and willing to respond by reshaping its policies. Many groups pleaded with the Fed to allow nonprofits access to the program.

“I find the omission of nonprofits from the Main Street lending program not only unconscionable, but economically disastrous…the cost to society will be much greater in the long run than the cost to support these organizations with loans,” Lisa Gold of the New York-based Asian American Arts Alliance wrote in an email.

Others sought reduced minimum loans and a lower bar for borrowing.

“I would encourage you to lower the minimum loan amount from $1 million to $500,000,” Mitesh Ravel, a Subway franchise owner in Virginia, wrote in an email. “As a small business with 65 employees and about $5 million in revenue, $1 million is more than I need or can afford to finance.”

In tweaking the program, the Fed ultimately lowered the minimum loan threshold to $250,000. It also released a proposal to allow nonprofits to borrow alongside private companies.

So far 300 lenders have signed up to participate, Fed Chair Jerome Powell said this week. He also indicated the Fed was open to making further adjustments to the program.

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