Last updateFri, 27 Mar 2020 5pm

U.S. Jobless Claims Reach Record High

Shattering the old mark of 695,000 set in October of 1982, a record 3.28 million Americans filed for unemployment benefits this week. The consensus forecast among economists was approximately 1.5 million.

“This was way bigger than we thought and the market’s still moving higher,” Randy Frederick, vice president of trading and derivatives at Charles Schwab, told CNBC. “That’s a very encouraging sign that we may be in a bottoming process.”

Senate, White House Agree to Terms on Stimulus Package

Negotiators representing the White House and Senate agreed to terms early Wednesday morning on a $2 trillion piece of legislation; the largest economic stimulus package in modern U.S. history.

“The deal is set to include a range of far-reaching provisions. Everything from $1,200 government checks for individuals to hundreds of billions of dollars to fight the crisis are included,” Yahoo Finance reports.

“But the most contentious part of the negotiations were clearly provisions to send over half a trillion dollars directly to impacted businesses.”

Manufacturing Falls by Most in Over a Decade

Manufacturers registered the fastest deterioration in operating conditions since the depths of the financial crisis in March, as signaled by a fall in the IHS Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) from 50.7 in February, to 49.2 at the end of the first quarter.

Note that the headline PMI was buoyed by longer supplier delivery times (which are normally a sign of improving demand). Steep rates of contraction were signaled for production and new orders, both of which fell to the greatest extent since 2009, with many firms linking this to the escalation of preventative measures following the outbreak of COVID-19. Some companies have reported having to shut down and give refunds where orders could not be fulfilled in time.

U.S. Industrial Production Up in February

Industrial production rose 0.6% in February after falling 0.5% in January. Manufacturing output edged up 0.1% in February, but it was still 0.4% below its level of a year earlier. The output of durable goods increased 0.3%. Capacity utilization for manufacturing in February was 75.0%, unchanged from its rate in January but 3.2% below its long-run average.

Second Quarter GDP Could Shrink as Much as 10%

In a note sent out to clients on Monday night, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said, “We now guesstimate that second quarter GDP will drop at a 10% annualized rate, after a 2% fall in Q1.”

Others aren’t quite as pessimistic, but the outlook is still grim no matter who you ask. A recession appears to be inevitable at this point. 


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