The number of Americans filing new claims for unemployment benefits fell last week as the labour market steadily gains traction, but worker shortages are frustrating efforts by businesses to ramp up hiring to meet strong demand for goods and services.
Initial claims for state unemployment benefits fell 26 000 to a seasonally adjusted 360 000 for the week ended July 10, the Labour Department said yesterday. Economists polled by Reuters had forecast 360 000 applications for the latest week.
Claims have struggled to make further progress since dropping below 400 000 in late May, even as at least 20 states led by Republican governors have pulled out of federal government-funded unemployment programs.
The early termination of the federal programs followed complaints by businesses that the benefits, including a $300 weekly cheque, were encouraging unemployed Americans to stay at home.
The economy is experiencing a shortage of workers, with a record 9,2 million job openings as of the end of May.
About 9,5 million are officially unemployed. The disconnect has also been blamed on lack of affordable child care, fears of contracting the virus as well as pandemic-related career changes and retirements.
There is so far little evidence that the early termination of federal benefits, which started on June 12 and will run through July 31, has led to a surge in job searches.
The expanded benefits will lapse on September 6 for the rest of the country.
Federal Reserve Chair Jerome Powell told lawmakers on Wednesday that he expected that “job gains should be strong in coming months as public health conditions continue to improve and as some of the other pandemic-related factors currently weighing them down diminish”.
The Fed’s latest Beige Book report, a collection of anecdotes from businesses across the country, showed demand for labour was broad-based, but “strongest for low-skilled positions,” noting that “firms in several Districts expected the difficulty finding workers to extend into the early fall.”
Companies are clamouring for workers to increase production of goods and services amid surge in demand unleashed by Covid-19 vaccinations, low interest rates and nearly US$6 trillion in government relief since the pandemic started in the United States in March 2020.
Though at least 160 million Americans are fully immunised against Covid-19, some parts of the United States with low vaccination rates are experiencing a surge in infections from the Delta coronavirus variant, which could slow the recovery.
Claims have declined from a record 6 149 million in early April 2020. They, however, remain above the 200 000-250 000 range that is seen as consistent with a healthy labour market.
Some of the recent elevation in claims has been blamed on the so-called seasonal factor, which the government uses to iron out seasonal fluctuations from the data.
“This, obviously, is not a normal year,” said Lou Crandall, chief economist at Wrightson ICAP in Jersey City.
“The seasonal factors for claims in recent months have often added noise to the published series rather than smoothed the data out.” — Reuters.