Given the increasing layoffs due to the coronavirus pandemic, government data released on Thursday showed that claims to US unemployment insurance have increased, particularly for hotel and restaurant workers.
In the meantime, a separate report showed that Philadelphia manufacturing collapsed this month as the virus continued to force companies to close their doors.
In the week ending March 14, initial unemployment claims rose seasonally adjusted by 70,000 to 281,000, the highest since September 2017, the report said. Economists expected a jump that was far above the consensus forecast.
The increase was "clearly attributable to the effects of the COVID-19 virus," the Department of Labor said, noting that "many states have reported increased layoffs in the service sector in general, and in the accommodation and food service sector, as well as in the transportation and storage industries. "
The largest increases were recorded in Washington, the location of the first US outbreak, Nevada, home of Las Vegas and California, according to raw data without seasonal adjustment.
In the same week of 2019, initial applications were 219,000, and economists expect the situation to worsen.
"Several government employment agencies reported a sharp rise in unemployment insurance applications this week, with some even malfunctioning due to the increase," said Mickey Levy of Berenberg Capital Markets.
The Philadelphia Federal Reserve Bank's monthly manufacturing survey found that activity "declined steeply this month." The index fell from a three-year high from 36.7 to -12.7, the lowest since July 2012 and the largest decline since the beginning of the month.
The new orders index also turned negative in the latest survey, showing that manufacturing, which is a small but important part of the U.S. economy and is already in recession due to the U.S. trade war with China, is affected .
"Manufacturers are facing an unprecedented drop in demand, in addition to the huge supply chain disruption and disrupted trade war. The sector will be in deep recession for the foreseeable future," Ian Shepherdson of Pantheon Macroeconomics said in an analysis.