The number of Americans filing new unemployment benefit claims fell to a 16-month low last week as the labor market steadily gains traction, but labor shortages frustrate companies’ efforts to increase employment to meet strong demand for goods and services.
While other data on Thursday showed that import prices rose solidly in June, prices are likely to have peaked, which could support the perception that high inflation is temporary. The economic recovery from the COVID-19 pandemic has been accompanied by faster inflation, reflecting strong demand and supply constraints.
Federal Reserve Chairman Jerome Powell told lawmakers Wednesday that “inflation has risen sharply and is likely to remain high in the coming months before it moderates.”
Initial claims for statelessness benefits fell 26,000 to seasonally adjusted 360,000 for the week ending July 10, the lowest level since mid-March 2020, the Labor Department said. Data for the previous week were revised to show 13,000 more applications received than previously reported.
Economists polled by Reuters had predicted 360,000 applications for the past week. On an unadjusted basis, claims rose by 544 to 383,166 last week.
Demands have struggled to make further progress since falling to less than 400,000 by the end of May, even as at least 20 states led by Republican governors have withdrawn from federal government-funded unemployment programs. Unemployed people are required to file claims under the regular state programs to determine eligibility for federal benefits.
The early termination of the federal programs was followed by complaints from companies that the benefits, including a weekly check for $ 300, encouraged unemployed Americans to stay home. The economy is experiencing a shortage of workers with a record 9.2 million job openings at the end of May.
About 9.5 million people are officially unemployed. The outage has also been blamed for a lack of affordable childcare, fears of getting coronavirus as well as pandemic-related career changes and retirement. So far, there is little evidence that the early cessation of federal benefits, which began on June 12 and runs through July 31, has led to an increase in job searches.
The extended benefits expire on September 6 for the rest of the country. Powell told the U.S. House of Representatives Financial Services Committee on Wednesday that he expected “job gains to be strong in the coming months as public health conditions continue to improve and as some of the other pandemic-related factors currently weighing them down” . “
The Fed’s latest Beige Book report, a collection of anecdotes from companies across the country, showed that the demand for labor was broad-based but “strongest for low-skilled jobs”, noting that “companies in several districts expected difficulties in finding workers to expand into the early fall. ”
US stocks opened lower. The dollar fell against a basket of currencies. US government bond yields were lower.
Companies are complaining about workers for increasing production of goods and services amid a rise in demand released by COVID-19 vaccinations, low interest rates and nearly $ 6 trillion in government aid since the pandemic began in the United States in March 2020.
Although at least 160 million Americans are fully immunized against COVID-19, some parts of the country with low vaccination rates are experiencing an increase in infections from the Delta variant of coronavirus, which may slow the recovery.
Claims have fallen from a record 6.149 million at the beginning of April 2020. However, they are still above the range of 200,000-250,000, which is seen as in line with a healthy labor market.
Some of the recent increases in requirements have been blamed for the so-called seasonal factor that the government uses to smooth out seasonal fluctuations from the data.
The injury report showed that the number of people continuing to receive benefits after first-week assistance fell 126,000 to 3,241 million in the week ending July 3rd. There were 13.8 million people who collected unemployment checks during all programs in the week ending June 26th.
In another report Thursday, the Labor Department said import prices rose 1.0% in June after rising 1.4% in May. In the 12 months to June, import prices rose by 11.2% against 11.6% in May. Economists polled by Reuters had expected import prices excluding tariffs would rise 1.2%.
The government reported this week that consumer prices rose the most in 13 years in June, while producer prices rose.
Imported fuel prices rose 4.7% last month after rising 5.5% in May. Oil prices rose 4.6%, while the cost of imported food rose 1.9%. Excluding fuel and food, import prices rose by 0.6%. These so-called core import prices rose by 1.1% in May.
The report also showed that export prices rose 1.2% in June after rising 2.2% in May. Prices for agricultural exports rose 1.5%. Non-agricultural export prices rose 1.1%.
Export prices rose 16.8% year-on-year in June after rising 17.5% in May.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao)