U.S. unemployment is expected to be around 20 percent in Friday’s jobs report.
The U.S. government’s employment survey for May will be released at 8:30 a.m. Eastern time. The job losses are expected to be far less than those in April — but that is small consolation.
Economists surveyed by FactSet expect the report to show that employers cut 8.5 million jobs in May, down from more than 20 million in April, and that the unemployment rate hit 19.8 percent, the highest level since the Great Depression.
Many economists expect that May will be the nadir for the job market, and that unemployment will begin to ease as states reopen and businesses call employees back to work. But it will take far longer for the economy to climb out of the hole than it did to fall into it.
Perhaps the most troubling sign for the recovery is evidence that job losses have spread beyond travel, hospitality and other sectors that were directly affected by the pandemic.
“In some ways, those jobs that were working from home were protected from the initial bomb that went off,” said Andrew Challenger, senior vice president at Challenger Gray & Christmas, an outsourcing firm that tracks layoffs. “We’ve really seen over the last five to six weeks that those jobs are now on the chopping block.”
Global stocks rise as recovery hopes return.
Global stocks rose steadily on Friday, despite widespread expectations of glum employment data from the United States and a ho-hum performance from Wall Street the day before.
European stocks were 1 to 2 percent higher, while Asian shares shrugged off a sluggish performance earlier in the day and ended higher. Prices for U.S. Treasury bonds were lower, in another sign of improved market sentiment.
Futures markets were predicting that Wall Street would open about 1 percent higher.
The global stock performance reversed a weak Thursday on Wall Street, after the U.S. government said the overall number of workers on state jobless rolls had increased last week. More bad news is expected to come later on Friday, when U.S. government releases its employment survey for May.
But investors on Friday reacted to signs around the world that businesses were slowly but steadily returning to normal, as well as positive sentiment from renewed efforts by the European Central Bank to bolster the region’s economy.
Investors also looked positively on reports that the trade war truce between the United States and China was holding, despite worsening tensions between Washington and Beijing.
‘Made in America’ since 1818, Brooks Brothers may need a new calling card.
In late March, Brooks Brothers was showered with praise after announcing it would use its three clothing factories in the United States to make personal protective equipment to help fight the coronavirus.
Now those factories may become casualties of the coronavirus, and the future of Brooks Brothers — not to mention its identity as the ultimate “Made in America” brand, one that has dressed presidents and former presidents dating to James Madison — is uncertain.
Brooks Brothers plans to lay off nearly 700 employees this summer at the factories, in Massachusetts, New York and North Carolina. The company is also trying to find buyers for the factories by mid-July, and expects to close them if it can’t.
In an interview, Claudio Del Vecchio, the 63-year-old Italian industrialist who bought Brooks Brothers in 2001 and was responsible for acquiring the factory in Massachusetts, spoke for the first time about the decision to divest from the vertical made-in-America supply chain.
“I feel very bad about this,” Mr. Del Vecchio said. But he added, “The factories never made money for us, and at this moment all resources need to be maintained and saved to make sure we can come out on the other side of the crisis.”
Faced with plunging sales that have already led to tens of millions of layoffs, companies are trying to renegotiate their office and retail leases — and in some cases refusing to pay — in hopes of lowering their overhead and surviving the worst economic downturn since the Great Depression. This has given rise to fierce negotiations with building owners, who are trying to hold the line on rents for fear that rising vacancies and falling revenue could threaten their own survival.
Simon Property Group, the biggest mall operator in the United States, this week sued Gap, the owner of retail chains that include Old Navy and Banana Republic, for nearly $66 million in unpaid rent for April, May and June, according to a lawsuit filed in Delaware this week.
In many cases, the strongest tenants — those most able to pay — are driving the hardest for a discount. They include brand-name companies like LVMH, the luxury goods conglomerate that owns Sephora and other outlets; and Starbucks, which had $2.6 billion of cash on hand at the end of March and would have little problem selling stock or bonds to raise more money.
Beyond the immediate impact of business closings on tenants’ revenue are larger questions, including the already-dire trends for malls and shopping centers, how office and consumer behavior might change after the pandemic, and the effects of recent looting and vandalism on retail corridors. Will companies need more space so that employees can spread out, or will they need less because they need fewer offices at all?
Gap, one of the biggest U.S. retailers with its namesake, Old Navy and Banana Republic chains, said on Thursday that net sales in the first quarter plummeted 43 percent to $2.1 billion and that it posted a net loss of $932 million, as it struggled with store closures because of the pandemic.
The company, which has nearly 2,800 stores in North America, said that it had reopened more than 1,500 locations and expected the “vast majority” of stores to be open by the end of June. The retailer saw major drops across most of its brands, but net sales declined only 8 percent at Athleta as customers flocked to athleisure. Casualwear was popular across brands as shoppers worked from home, the company said. That trend, however, hurt Banana Republic.
Gap said on an earnings call on Thursday that its reopened stores are operating at nearly 70 percent of their performance last year, with particular strength at Old Navy, which is “advantaged” with off-mall locations. It was also upbeat about a new collection called Gap Teen, which was introduced during the quarter and emphasizes sustainability.
Simon Property Group, the biggest mall operator in the United States, is suing Gap, the owner of retail chains including Old Navy and Banana Republic, for about $66 million in unpaid rent for April, May and June, according to a lawsuit filed in Delaware this week.
Simon Property said that it notified Gap in writing that the retail conglomerate had failed to pay $48.2 million in rent and other charges as of May 5, but that the company still had not made the payments as of Tuesday. Gap, one of the biggest specialty store operators in the world, also owns Intermix, Athleta and outlet stores.
The retailer said on the call that it was in active negotiations with landlords.
Sonia Syngal, Gap’s chief executive since March, started the call by acknowledging the protests across the country and noted that the company has the chance ”to create a world that is more inclusive.” She noted that 20 of its stores sustained “extensive damage” as part of the protests.
A tweak to a stock award adds millions to a C.E.O.’s pay package.
Raytheon Technologies, one of the country’s biggest defense contractors, recently cut salaries for thousands of employees as the pandemic crimped business. Around the same time, it also quietly made a change to the pay package of its chief executive, Gregory J. Hayes, that could increase his future income by millions of dollars.
Last Friday, after the market closed, Raytheon disclosed in a filing that it had tweaked how it calculates certain stock-related payouts owed to senior executives and employees. The filing did not state by how much Mr. Hayes or others stood to benefit.
The change led to an estimated $12.5 million gain for Mr. Hayes on his recent equity awards, Raytheon later told The New York Times. The company said the change was necessary to ensure that Mr. Hayes and 3,900 employees — about 2 percent of its work force — did not lose compensation they had already been awarded.
But some analysts said the change undermined Raytheon’s commitment to use pay to keep executives’ interests in line with those of shareholders. Publicly traded companies have come under pressure to structure stock-related compensation in a way that creates incentives for executives to improve long-term performance and not just seek to enrich themselves in the short term.
Catch up: Here’s what else is happening.
Slack, the business communication platform, said in a regulatory filing that its first-quarter revenue rose 50 percent to $201.7 million from the same period last year. The chat service reported a loss of 2 cents per share in the quarter, which ended April 30, an improvement over a loss of 23 cents a share in first quarter of 2019. But the results disappointed investors, who expected greater growth during the pandemic, and its shares plunged 15 percent in after-hours trading.
Reporting was contributed by Conor Dougherty, Peter Eavis, Ben Casselman, Anupreeta Das, Peter Eavis, Vanessa Friedman, Mohammed Hadi, Sapna Maheshwari, Gregory Schmidt, Carlos Tejada and Kevin Granville.