Business

WASHINGTON — With shops and factories closed nationwide due to the coronavirus pandemic, nearly all of the jobs created in the US economy in the last decade were wiped out in a single month.

      An unprecedented 20.5 million jobs were destroyed in April in the world's largest economy, the biggest amount ever recorded, the Labour Department said in a report released on Friday, the first to capture the impact of a full month of the lockdowns.

      That drove the unemployment rate to 14.7 per cent from 4.4 per cent in March -- the highest level since the Great Depression of the last century.

      The United States is home to the world's largest and deadliest coronavirus outbreak, with more than 75,000 fatalities and 1.2 million cases reported as of Thursday, according to Johns Hopkins University.

      The economic damage from the lockdowns to contain the virus has been swift and stunning, despite nearly $3 trillion in financial aid approved by Congress, and there is growing fear that the temporary layoffs will become permanent since some companies will not survive.

      Taken together, 21.4 million jobs were destroyed in March and April, nearly equal to the 23 million positions created during the economy's long expansion from February 2010 to February 2020.

      All major industry sectors felt the pain.

      Leisure and hospitality was the first sector hit and the one bearing the brunt of the impact of the lockdowns, shedding 7.7 million jobs, while manufacturing eliminated 1.3 million positions.

      Those two sectors alone added up to more than the 8.6 million total jobs lost in the two years of the global financial crisis.

      As bad as the data was, the real picture likely is much worse. The Labour Department noted the unemployment rate would have been closer to 20 per cent, but some workers were misclassified as employed when they actually had been laid off because of COVID-19.

Not a good future

      The pandemic has caused many employees to leave the workforce altogether, while others have been forced from full-time jobs into part-time work.

      The measure of the labour force as a share of the total population sunk to 51.3 per cent, its lowest in history, meaning nearly half of working-age Americans are not employed.

      Minorities were hit particularly hard: African American unemployment spiked to 16.7 per cent from 6.7 per cent in March, while the rate for Hispanics was 18.9 per cent, more than triple last month.

      President Donald Trump said on Friday the numbers were expected, and promised: "I'll bring it back."

      "I think it's going to come back blazing," he told reporters on the economy.

      But 57-year-old Sandra Mahesh, who recently lost her job in Maryland and had her unemployment benefits cut off, is not hopeful.

      "I don't see a good future with America right now," she told AFP.

      While Trump proclaimed on Fox News earlier Friday that "even the Democrats aren't blaming me" for the job losses, Democratic presidential candidate Joe Biden lambasted him for his handling of the crisis.

      "Donald Trump utterly failed to prepare for this pandemic and delayed in taking the necessary steps to safeguard our nation against the near-worst-case economic scenario we are now living," Biden said in a statement.

Low-wage destruction

      Echoing the fears of many economists over the fates of small businesses, Biden said, "A lot of them won't open again because they do not have a cushion due to three years of Trump's policies that reward the biggest companies."

      The report showed average wages rose, but economists say that is merely another sign of catastrophe.

      "In April, the job losses were disproportionately concentrated in relatively low-wage sectors like leisure and recreation," Ian Shepherdson of Pantheon Macroeconomics said in an analysis.

      A University of Chicago study based on the huge ADP private payrolls database found that low-wage workers saw employment decline by 35 per cent, a rate three times as high as the nine per cent decline seen by top earners.

      Job losses at the bottom of the wage scale account for one third of the total decline, the authors found.

      "The beginning of this likely 'Pandemic Recession' is unprecedented," co-author John Grigsby said on Twitter.

      "Labour market declines (are) concentrated among low-income workers and small firms, precisely those that are unlikely to have savings to smooth over shock." 

BEIRUT — Lebanon has arrested the head of the money exchange union as it battles to stabilise the value of the country's nose-diving currency on the black market, a security official said on Friday.

      "The head of the money changers' syndicate, Mahmoud Mrad, was arrested (Thursday) at the request of Lebanon's financial prosecutor" on charges of "tampering" with the value of the Lebanese pound, the official said.

      "Money exchange houses have been buying dollars at a very high price," driving up the exchange rate, the source told AFP.

      Mrad is currently under investigation.

      The pound had been pegged to the dollar at 1,500 since 1997, but Lebanon's worst economic crisis in decades has seen its value plunge by more than half on the black market.

      To stem a further devaluation, the central bank ordered exchange offices late last month to cap the rate at 3,200 to the dollar.

      But the pound has since fetched more than 4,000 to the greenback, prompting a government crackdown on incompliant offices.

      To escape prosecution, many money exchange offices have closed their doors.

      But some have continued to operate secretly, sometimes delivering money to their clients' homes.

      "Over the past two weeks, around 50 money changers were arrested," the security source said.

      "Those who have a licence signed a pledge to abstain from tampering with the value of the dollar and were later released," he added.

      "Those without a licence were transferred to the judiciary for investigation."

      The money changers' union called Mrad's arrest a "regrettable incident" and expressed its commitment to central bank orders.

      But it would be "difficult to commit to any pre-determined rate in a fluctuating market controlled by supply and demand", the union said.

      Lebanon is in the thick of its worst economic crisis since its 1975-1990 civil war, compounded by the coronavirus epidemic.

      Forty-five per cent of Lebanon's population now lives below the poverty line, and tens of thousands of people have lost their jobs or seen salaries slashed because of the downturn.

      A liquidity crunch has seen banks halt dollar transfers and withdrawals, forcing depositors to deal in the free-falling Lebanese pound.

      To ease demand for the greenback, commercial banks in April started to allow pound withdrawals from dollar savings at double the official rate.

      But the value of the dollar on the black market has continued to climb.

      "We are forced to buy dollars on the black market to supply dollars to businessmen, especially those who trade in food," one money exchange told AFP on condition of anonymity.

      "The central bank and commercial banks are not giving out dollars, so the only way to find them is on the black market."

      Last week, the Lebanese government adopted an economic reform plan and signed a request for financial assistance from the International Monetary Fund.

      The roadmap is based on an exchange rate of 3,500 to the dollar. It advocates a floating currency that will gradually lose value against the dollar.

NEW YORK — Global stock markets rose on Friday as optimism over the easing of coronavirus lockdown measures and reopening economies outweighed signs that the planet may be headed for its worst downturn since the Great Depression.

      A massive drop in employment in the United States last month, although historic, was not quite as bad as feared and failed to put much of a dent in market confidence.

      Nonfarm payrolls fell by 20.5 million in April, the US government reported, which compares to the 21 million market consensus established by data firm Factset.

      "Brutal though the numbers are, they are marginally better than economists' expectations and this triggered an initial rally in US equities," said Ulas Akincilar, head of trading at Infinox.

      Analysts also pointed to conciliatory statements from Chinese and American officials following talks, which lessened fears of a revived trade war.

      Major US indices were in positive territory the whole session, with the Dow finishing up more than 450 points, or 1.9 per cent, at 24,331.32.

      The gains were the latest instance of markets looking at economic reports that are bad, but not significantly different than expected, and instead focusing on positive news such as the gradual restart of economic activity in some parts of the United States and Europe.

      Art Hogan, chief market strategist at National Securities, said investors believe the economy will bottom out in the second quarter and improve after that.

      Investors do not anticipate a second wave of coronavirus cases bad enough to lead to widespread lockdowns in the US, he added.

       'Darkest day'

      "Markets knew this was coming but it will still go down as the darkest day in the country's economic history," said Ayush Ansal at Crimson Black Capital, calling the data "harrowing."

      In Europe, London's closure for VE Day took much of the usual volume out of the trading day, but Paris and Frankfurt were open and up by a per cent or more at the close.

      But some analysts advised caution against underestimating the depth of the economic crisis, with Michael Hewson at CMC Markets observing that "it almost appears that the worse the US data is, the higher stocks seem to go."

      The easing of lockdowns also provided another boost to beaten-down oil markets.

      "People are getting back in cars to commute or merely to get out of the house, which is excellent for gasoline demand as that is providing the first phase in a bounce to the oil price recovery," said Stephen Innes of AxiCorp.

SAN FRANCISCO — Google and Facebook have told most employees to keep working from home for the rest of the year as part of a response by the tech giants to the deadly coronavirus pandemic.

      Chief executive Sundar Pichai told Google staff at an all-hands meeting that its remote work policy will be extended until 2021, the Silicon Valley giant confirmed on Friday.

      Any return to offices was expected to be incremental and staggered, according to the company.

      The news came along with US media reports that Facebook is also letting workers tend to their jobs remotely for the rest of this year.

      Google employees who need to return to offices will be able to do that in the next month or two, with added safety measures in place due to coronavirus concerns, but most of the staff will continue working from home.

      Facebook's updated plan is to re-open offices in early July, but let people work from home if they prefer until 2021, according to reports.

LONDON — Bitcoin miners, whose computer processors enable the running of the world's most popular virtual currency, will soon face an event that takes place every four years and alters the profitability of the hi-tech industry.

      The so-called halving is when cryptocurrency-mining companies and individuals find out the reduced payment that they will receive in return for their contribution to the system's smooth operation.

      Bitcoin was created in 2008 by a person or group writing under the pseudonym Satoshi Nakamoto as a peer-to-peer decentralised electronic cash system.

      The virtual unit was once the preserve of internet geeks and hobbyists, but it has since exploded in popularity, with mining performed by huge banks of computers.

      - How does mining work? -

      Bitcoins are traded via a decentralised registry system known as a blockchain.

      The system requires massive computer processing power in order to manage and implement transactions.

      That power is provided by miners, who do so in the hope they will receive new bitcoins for validating transaction data. 

      The system poses a complex computer puzzle to decide which miner wins the privilege to validate the block and thus receive the reward.

      "To understand halving, it is important to remember the role of miners, who are basically responsible for the bitcoin network security," ThinkMarkets analyst Fawad Razaqzada told AFP.

      "Each time a block of bitcoin transaction takes place, they need to be verified by miners. The miner that verifies each block gets a reward for its work with more, newly created, bitcoins."

       What is halving? 

      This occurs every four years and basically involves the halving of the reward from bitcoin mining.

      The cryptocurrency's first "halving" occurred in November 2012, and the second in July 2016. The third is widely expected to take place around next Tuesday. 

      "Halving will impact profitability of mining bitcoin because work and resources will need to double in order to achieve the same reward as before," added Razaqzada.

      "However, if the value of bitcoin appreciates significantly then this will offset some of the costs."

      Commercial mining operations often occupy huge hangers or warehouses, and consume large amounts of electricity to power and cool the computers, which is a considerable cost in addition to equipment.

       Why reduce the reward? 

      The reward was originally set at 50 bitcoins but it was subsequently reduced to 12.5 and will likely reach just 6.25 next week.

      The amount has been trimmed over time in order to implement an overall global limit of 21 million bitcoins.

      "With the supply of bitcoins mandated to eventually reach the limit of 21 million, the creator(s) of the digital currency had decided that these rewards must decay exponentially, otherwise supply will not be controlled," added Razaqzada.

      "So, the network is programmed to cut the reward every 210,000 blocks, or about every four years," he said, noting that the halving date depended on mining activity.

      What is bitcoin worth? 

      Bitcoin stood on Tuesday at $9,200 after a choppy few months, linked to coronavirus markets turmoil. 

      That compares with $7,100 at the start of the year, according to Bloomberg data, but it remains far from the record high $19,511 hit in December 2017.

      "February and March were rough months for bitcoin like other risk assets, but the digital currency has staged the most impressive recovery," said Razaqzada.

      "This is partly due to the fact some investors consider bitcoin to be a safe-haven asset, while some have undoubtedly bought speculatively ahead of the so-called 'halving' event in anticipation (that) we may see the value of the cryptocurrency appreciate."

BEIRUT — Lebanese President Michel Aoun said on Wednesday that financial assistance from the International Monetary Fund (IMF) was "mandatory" for an economic recovery, as the country sinks deeper into financial turmoil.

      Lebanon is in the thick of its worst economic crisis since the 1975-1990 civil war, compounded by the coronavirus epidemic.

      Forty-five per cent of Lebanon's population now lives below the poverty line, and tens of thousands of people have lost their jobs or seen their salaries slashed as a result of the downturn.

      Aoun on Wednesday met with most heads of the country's main parliamentary blocs to discuss the broad outlines of an economic reform plan that the government adopted last week but parts of which still require parliamentary support.

      The economic roadmap comes with a government request for IMF assistance, which Aoun called "a mandatory path for recovery if we negotiate well and we are all fully committed to... reform".

      Parliament speaker Nabih Berri and Samir Geagea, head of the Lebanese Forces, a Christian political party, were among the attendees.

      But political heavyweights such as former prime minister Saad Hariri boycotted the session over objections to the current government's approach to the economic crisis.

      Aoun said the rescue plan was not the responsibility of a single group or party.

      "Getting out of the dark tunnel that we are crossing is everybody's responsibility," he said.

      This reform plan, the president said, "aims at correcting the structural imbalances" of a free falling economy, but its success requires "sacrifices"

      The roadmap -- long seen as a prerequisite for external financial aid -- aims to reduce Lebanon's enormous public debt burden from 170 per cent of GDP to less than 100 per cent.

      It calls for a restructuring of the banking sector and the country's enormous debt pile, as a well as tax hikes and a freeze in state hiring, among a raft of other reforms.

      It comes against the backdrop of a series of economic woes, which include a dollar liquidity crunch, soaring inflation, the country's first sovereign debt default and a devaluation of the Lebanese pound.

      The pound has been selling for more than 4,000 to the dollar on the black market in recent weeks in a record low.

      Although the official exchange rate remains fixed at 1,500 to the dollar, the government's reform plan is based on an exchange rate of 3,500 to the greenback.

      "What we are offering is not a sacred text, it can be developed" further, Prime Minister Hassan Diab said at the meeting.

      "We are presenting this plan to you because it is not the property of the government," he said. "It is a work programme for the state."

FRANKFURT AM MAIN — Some 61 per cent fewer new cars were registered on German roads in April 2020 than a year ago, official data showed on Wednesday, as Europe's automobile powerhouse matched its neighbours' plunging sales for the industry.

      At 120,840, the sales figure from the KBA road transport authority was the lowest monthly reading since German reunification in 1990, as measures to slow the spread of the novel coronavirus took their toll.

      However, Germany's sales crunch was not as bad as the April collapses of 97 per cent in Britain and Italy and 89 per cent in France.

      April was the first month to show "the full extent of the coronavirus' consequences for the car market," said Reinhard Zirpel, president of the Federation of International Car Manufacturers.

      "Customer demand for new vehicles has almost completely collapsed in this period of huge uncertainty."

      As well as sales, car production plummeted by 97 per cent in April, to just 10,900 vehicles, the VDA domestic carmakers' organisation said.

      Manufacturing was "hit harder than any time since the founding of the federal republic" in 1949, the VDA added.

      Over the year to April 30, Germany built just one million cars -- down 38 per cent year-on-year.

      Ministers led by Chancellor Angela Merkel and car industry leaders reached no agreement on Tuesday at a conference on stimulus measures for the vital sector, which employs around 800,000 people in Europe's largest economy.

      Bosses have called for a "cash-for-clunkers" scheme similar to one launched during the 2008-9 financial crisis.

      But some economists, politicians and environmental campaigners oppose the scheme, which they say could prove inefficient and slow carmakers' transition to more environmentally-friendly power sources.

      "I have big problems with a discount that supports the power systems of the past" like internal combustion engines, said Lars Klingbeil, general secretary of Merkel's junior coalition partners the Social Democrats.

      Instead of immediate action, a "working group" will now sketch out possible forms of state support and report by next month.

LONDON — Equities and crude rallied on Tuesday as investors cheered a further easing of lockdowns in some countries, which offset fears of a renewed trade war between China and the United States.

       Signs that the coronavirus is easing have allowed governments in Europe and parts of Asia-Pacific as well as some US states to begin allowing some businesses to reopen.

      "Markets have reacted to the fact that it seems that there is a little light at the end of the tunnel," Scope Markets analyst James Hughes told AFP.

      "Lockdown easing in the likes of Spain and Italy has led to many looking at timelines for many aspects of life re-opening.

      "Even if the full return to normal life is not yet on the cards, the recent moves at least give many the sense that we are on the right path."

      The gains helped markets claw back some of Monday's steep losses, though there remains a sense of caution on fears of a second wave of infections and as traders contemplate a long recovery from the economic destruction.

      In midday deals, London won one per cent, while in the eurozone, Frankfurt and Paris rebounded by 1.5 per cent apiece.

      Madrid and Milan each chalked up gains of 0.9 per cent.

      "We must be cautious over the lockdown easing however as a return to normal life is still a long way off with social distancing measures likely to be place for many more months," added Hughes.

      "So markets may be in recovery mode but we are yet to realise the full effect that a virtual halt to the global economy has had on many individual countries."

      In Asia, Hong Kong closed up 1.1 per cent as dealers cheered news that some restrictions would be lifted in the city and brushed off data showing its economy suffered its worst contraction on record in the first quarter.

      The reading means it is suffering its longest recession since the financial crisis.

      Sydney gained more than one per cent, while Mumbai gained 0.8 per cent and Taipei edged up 0.5 per cent. Tokyo, Seoul and Shanghai were shut for holidays.

      Dealers were keeping tabs on China-US relations after Donald Trump hit out at Beijing over its handling of the outbreak, saying it began in a Wuhan lab, but so far offering no evidence.

      The comments, and his warning he could hit China with fresh tariffs, fanned fears of a repeat of the standoff between the economic superpowers that battered markets last year.

      Beijing has not officially responded to the comments.

      The global easing of lockdown restrictions fanned a sizeable rise in oil prices, which had endured a torrid April, with signs of a pick-up in demand helped by massive output cuts by key producers.

PARIS — The Expo 2020 global trade fair, hosted by Dubai, has been postponed by a year due to the coronavirus outbreak and will be held from October 1, 2021, to March 31, 2022, the Paris-based organiser said on Monday.

      The six-month, multibillion-dollar global innovation fair, set to be the largest event ever staged in the Arab world, was expected to attract some 24 million visitors starting October 20 this year.

      But a two-thirds majority of member states of the Bureau International des Expositions (BIE) voted in favour of a delay requested by the United Arab Emirates, which the body said "allows all participants to safely navigate the impact of COVID-19."

      "Expo 2020 Dubai is gearing up to help shape a post-pandemic world and create a better future for all," the bureau said in a statement.

      The delay "also allows the World Expo to focus on a collective desire for new thinking to identify solutions to some of the greatest challenges of our time."

      Dubai, the glitzy city-state which is part of the United Arab Emirates and is known for hosting hundreds of conferences annually, has already scrapped a string of cultural and entertainment events amid the pandemic.

Unable to meet in a general assembly due to epidemic restrictions, BIE member states voted remotely on the delay.

      The vote technically remains open until May 29, but the required two-thirds threshold for approving the postponement was reached within a week of voting opening on April 24, the statement said.

      They also voted to retain the name Expo 2020 Dubai.

      It will be the first World Expo held in the BIE's Middle East, Africa and South Asia region, welcoming 192 countries, plus businesses, multilateral organisations and educational establishments. 

WASHINGTON — The CEO of Southwest Airlines, one of the largest US air companies, said on Sunday that travelers could again fly in safety and added that air traffic, nearly paralysed by the coronavirus pandemic, was gradually reviving.

      Asked on CBS whether it was again safe to fly, Gary Kelly replied, "It is. We're doing everything possible to encourage people to come back and fly."

      He said his airline was taking several safety precautions: passengers and crew members will be required to wear masks; planes will receive deep cleaning between flights; and some seats will be left empty to allow a degree of social distancing.

      "I don't think the risk on an airplane is any greater risk than anywhere else," Kelly said.

      "You look at the layered approach that we use, it's as safe as any environment you're going to find."

      Kelly said he believes the worst has passed for the industry.

      "I think we've seen the bottom here," he said. "Each week after the first week of April has gotten successively better. I don't think June will be a good month, but... we're looking forward to July and August."

      He acknowledged, however, that things remain in flux.

      "There are bookings in place, but those could easily be canceled," he said. "It is one day at a time."

      Southwest has received $3.2 billion in emergency assistance from the government and has applied for an additional loan, but Kelly said he was not sure it would be needed.

      He said the government's relief plan had given the markets sufficient confidence that his company was able to raise an additional $6 billion last week.

      "I think we have what we need to see our way through," Kelly said.

      "We have until September to make that decision" on additional government aid.

      The federal assistance is conditioned on companies preserving jobs until the end of September.

      But the Southwest chief said that unless the recovery starts to kick in by July, the company might have to order a first round of layoffs.

      The Trump administration is distributing $25 billion in emergency assistance to airline companies, which employ some 750,000 workers in the United States.

      The celebrated investor Warren Buffett, ranked as the world's fourth richest man, said on Saturday that he had made a mistake by investing in the four biggest US airlines, including Southwest.

      He said his Berkshire Hathaway conglomerate had sold all its airline shares, including the 10 per cent of Southwest shares it had held.