- Weekly jobless claims increase from 16,000 to 351,000
- Four-week average of claims at 18-month low
- Continuing claims increase from 131,000 to 2.845 million
- Commercial activity slows down in September
WASHINGTON, Sept.23 (Reuters) – The number of Americans filing new jobless claims rose unexpectedly last week, spurred by surges in California and Virginia, but the underlying trend has remained consistent with a constantly recovering labor market.
The second consecutive weekly increase in jobless claims reported by the Labor Department on Thursday puzzled economists. Some blamed the California wildfires, while others blamed Hurricane Ida, which devastated U.S. offshore energy production in late August. There was little conviction that ongoing COVID-19 infections, driven by the highly contagious Delta variant of the coronavirus, were a factor.
“Some, but not all, of this recent pickup appear to be related to Hurricane Ida, as deposits in Louisiana have exceeded their pre-storm trend in recent weeks,” said Daniel Silver, economist at JPMorgan in New York City. “But even including storm-related claims, the recent surge in deposits hasn’t looked particularly bad so far, and we don’t think the labor market recovery has derailed at this point.”
Initial claims for state unemployment benefits increased from 16,000 to 351,000 seasonally adjusted for the week ended September 18. Economists polled by Reuters had forecast 320,000 claims for the past week.
Unadjusted claims in California jumped 24,221 while Virginia reported an increase of 12,879. There were also notable increases in Oregon, Ohio and Kentucky. Claims in Louisiana have plummeted and exceeded their pre-hurricane trend in recent weeks.
“Perhaps the fires in California and the lingering impact of Ida in Virginia contributed to these increases, but we don’t know for sure,” said Nancy Vanden Houten, chief US economist at Oxford Economics in New York. York. “We expect claims to resume their downward trajectory in the coming weeks, but the data will be more patchy as claims approach pre-pandemic levels.”
The four-week moving average of claims, considered a better measure of labor market trends because it eliminates week-to-week volatility, fell from 750 to 335,750 last week. This was the lowest level since mid-March 2020, when mandatory shutdowns of non-essential businesses were imposed when the country was criticized by the first wave of coronavirus cases.
Claims fell from a record 6.149 million at the start of April 2020, but still remain above the 200,000-250,000 range which is considered consistent with healthy labor market conditions.
The Federal Reserve released an optimistic note on the economy on Wednesday, paving the way for a reduction “soon” in its monthly bond purchases and signaling that interest rate hikes could follow sooner than expected. Read more
A survey by data firm IHS Markit on Thursday showed that business activity grew at its slowest pace in a year in September, with companies grappling with persistent shortages of raw materials and labor. artwork.
But the slowdown is probably temporary. A third Conference Board report showed that its leading economic index, an indicator of future economic activity in the United States, rose 0.9% in August after rising 0.8% in July. The Conference Board said that “the LEI trend is consistent with robust economic growth throughout the rest of the year.”
Wall Street stocks were trading higher. The dollar slipped against a basket of currencies. US Treasury prices were lower.
SHORTAGE OF WORKERS
Data on claims last week covered the period in which the government polled employers for the non-farm wage portion of the September jobs report. Claims changed little between the August and September wage surveys.
Job growth slowed in August, with payrolls posting their smallest gain in seven months as hiring stagnated in the high-contact leisure and hospitality sector.
The claims report also showed that the number of people continuing to receive benefits after a first week of assistance increased from 131,000 to 2.845 million in the week ending September 11. Next week’s data on alleged continuing claims will offer more clues as to where hiring is going. in September.
Factors related to the pandemic are causing labor shortages, limiting hiring. Fed Chairman Jerome Powell told reporters on Wednesday he expected “faster job gains” as such factors, including the lack of affordable child care and fears of contracting the child. viruses, decrease.
There was a record 10.9 million vacancies at the end of July. The Fed has projected the unemployment rate at 4.8% this year. This was up from the 4.5% rate forecast by the US central bank in June. The unemployment rate was 5.2% in August.
There is cautious optimism that the jobs crisis will ease after government-funded unemployment benefits expired earlier this month, which had been blamed by businesses and Republicans for encouraging the unemployed to stay at home. them.
At least 11.250 million people were receiving benefits under all programs during the week ended September 4. According to Andrew Stettner, senior researcher at the Century Foundation, more than 8 million people have lost all of their benefits in the event of a pandemic.
However, this is unlikely to increase the labor pool. An early termination of expanded benefits by about 25 states led by Republican governors over the summer has not resulted in an increase in hiring in these areas, and the Delta variant could cause reluctance among some people to return to work.
“For the job market, the recovery is underway, but supply shortages remain a headwind,” said Rubeela Farooqi, chief US economist at High Frequency Economics in White Plains, New York.
Reporting by Lucia Mutikani Editing by Chizu Nomiyama and Paul Simao
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