The number of citizens filing new jobless claims for unemployment aid decreased and went closer to the pre-pandemic levels for the week ended November 13 as the labor market recovery continued. But a shortage of workers is a hindrance to swifter job growth. The weekly jobless claims report from the Labor Department is the timeliest data on the economy's health. It also showed that the jobless aid rolls have decreased to their lowest mark in more than one-and-a-half years. The economy is getting back its momentum after a slow period over the summer because a wave of new coronavirus infections driven by the Delta variant struck the nation. The initial jobless claims for state unemployment aid dropped by a thousand to an adjusted figure of 268,000 for the week ended November 13. This was the lowest mark since the coronavirus pandemic in the nation, more than half a year ago.
Experts had forecasted the jobless claims figure to be 260,000 for the latest week. The smaller decrease was because the model that the Federal Government utilizes to take out the seasonal fluctuations from the data decreased the figure by a lot. The unadjusted jobless claims dropped to nearly 240,000. Kentucky led the decrease. This was mostly due to automobile workers returning to factories after temporary layoffs because car manufacturers are dealing with an international semiconductor shortage. There was also a big decrease in Ohio, Tennessee, and Michigan. These are states that also have a robust presence of auto manufacturers. Gus Faucher, the chief economist at PNC Financial, said, "Demand for labor is very strong, and workers are in short supply, so layoffs are very low right now."
The decrease in jobless claims offset a surge in filings in California
The seventh consecutive weekly decrease left jobless claims just above the level of 256,000 in the middle of March of the previous year. The data was in a range that is seen as the conditions of a healthy labor market. The jobless claims have decreased from a record high of more than six million in early April of last year. The improving economic tone was comparable to other data from the Philadelphia Federal Reserve. It showed an acceleration in manufacturing activity in the mid-Atlantic region for this month. The factories in the region that cover Delaware, southern New Jersey, and eastern Pennsylvania reported robust overall growth. They were also confident about business conditions over the next half-an-year. They expected to maintain a similar speed of capital expenditures the next year.
But raw material and labor shortages have persisted. This has led to a swift piling of unfinished work. This is even when manufacturers have increased the hours for workers. Factories have continued to face higher costs for inputs, which they are passing on to buyers. Stocks on Wall Street were trading lower. The dollar fell against a basket of currencies. The US treasury yields also decreased. Oren Klachkin, the US economist at Oxford Economics, said, "We look for voracious goods demand and a plethora of unfilled orders to keep factories pumping out goods at a very healthy pace. We also expect that businesses will continue to face major supply-chain problems next year. However, headwinds should start to ease in the second half of 2022."
Rubeela Farooqi, the chief economist for High Frequency Economics, said, "Overall, the labor market is on a gradual path of improvement. However, shortages — evident in the high level of job openings, which continue to outpace the number of unemployed individuals — are preventing a stronger recovery. Our expectation remains that as the cushion from savings continues to diminish, and assuming the virus does not disrupt activity once again, supply constraints will ease," Farooqi added. "That will not only provide a boost to job growth but will also help lift participation and take pressure off wages."
The jobless claims show tight labor market conditions
The jobless claims added to reports of increases in retail sales in October and a good rebound in production at factories show that the economic activity has increased early in the fourth quarter after the gross domestic product grew at its slowest speed in more than a year from July to September. Better growth could go on in the next year. A third report from the Conference Board has said that the index of leading economic indicators increased 0.9% in October after growing 0.1% in September. The labor market is getting narrower. The number of citizens continuing to get aid after an initial week decreased to more than 2 million in the week ended November 6. This was a decrease of 129,000. This was also the lowest mark since mid-March of last year. Over three million citizens were getting unemployment aid under all programs during the week ended October 30.
Decreasing unemployment rolls have increased hopes that more citizens will get back to the labor force soon. Millions of unemployed citizens remain at home even after the end of generous federal government-funded aid, the reopening of schools for in-person learning, and firms increasing their wages. The jobless claims data covered the period when the Federal Government surveyed business organizations for the nonfarm payroll data of November's employment report. The jobless claims have decreased since mid-October. This shows that stronger employment growth has happened this month. But workers are still scarce. As of the end of September, there are over ten million job openings. The economy created 531,000 in the previous month. The employment growth has averaged 582,000 jobs per month in 2021, and the labor force has declined by more than two million from its pre-pandemic mark.
For the week ended October 30, the total number of people claiming aid across all programs was just over three million. This figure is much below the mark of nearly 21 million on all programs during the same time in the previous year when the Federal Government boosted unemployment benefits were still going on. At the same time, getting workers has become harder for many organizations. Most companies have opted for bonuses and higher wages. Both Walmart and Target, some of the biggest private employers in the country, have declared increased labor costs in their most recent results. They are among a growing list of organizations that have seen their compensation expenses increase.
During the firm's earnings call, Target Chief Operating Officer John Mulligan said, "Labor is going to continue to be tight, and we will continue to focus on retaining our existing team," During their own earnings call, President of CEO of Walmart US John Furner said, "What you saw during the quarter in the third quarter, more specifically in gross margin, were costs that came through in terms of the supply chain, that would be everything from our domestic supply chains, labor [and] international supply chains as well." Ryan Sweet, the senior economist at Moody's Analytics, said, "There is some uncertainty as a key to monthly job growth is labor supply and the Delta variant. The good news is that the Delta variant's impact on the labor market in November will be less than that seen during the teeth of the recent wave."
These labor shortages have been ongoing for many months now. Many experts say that the present labor dynamics will finally normalize as the pandemic-related disruptions end and buyer savings from Federal Government stimulus earlier this year are pulled back.