The U.S. labor market recovery has slowed as the number of Americans claiming state unemployment benefits unexpectedly increased last week – the first such increase since April.
The U.S. labor market recovery has slowed as the number of Americans claiming state unemployment benefits unexpectedly increased last week – the first such increase since late April.
Weekly unemployment claims, an indicator of layoffs, hit 412,000 last week – 37,000 more than the revised level of 375,000 the week before, the US Bureau of Labor Statistics said Thursday.
Last week’s upward drift broke a six-week streak of declining weekly jobless claims and surprised many economists who waited for the downtrend to continue.
But the weekly data can be noisy and don’t necessarily indicate a turnaround in the labor market rebound is taking hold.
Indeed, the four-week moving average of weekly jobless claims, which helps remove some of the noise from the data, continued to decline to 395,000 – a drop of 8,000 from the revised average of the previous week.
The number of people currently receiving state unemployment benefits – aka “continuing claims” – also fell to 14,828,950 for the week ending May 29 – more than half a million fewer than the week before.
While weekly jobless claims are still nearly double the pre-pandemic figures, they have fallen sharply from the same period last year, when they averaged north of 1.4 million .
A big issue sweeping the country’s labor market right now is the number of open positions that companies are struggling to fill.
Jobs in the United States are plentiful a record 9.3 million in April, as millions of American consumers emerge from pandemic hibernation and businesses scale up operations to respond to the great surge in pent-up demand.
The fight for hiring suppresses job creation – a phenomenon observed in the latest monthly employment report this showed that the US economy created 559,000 jobs in May.
The economy still has 7.6 million fewer jobs than before lockdowns swept the country last year – and this deficit doesn’t even take into account the growth of the workforce and economy since then.
Economists are divided over what causes the disconnect between the number of unemployed workers and employers who cannot find enough people to fill the vacancies.
Some believe that the $ 300 federal weekly amount paid in state unemployment benefits discourages the unemployed from finding new jobs. Others point to a talent bottleneck as companies reopen or expand immediately. A lack of childcare options due to the ongoing closures of daycare centers and distance education, along with fear of contracting COVID-19 could also prevent unemployed workers from hammering sidewalks in search of job.
Whatever the cause, unemployed Americans can continue to rely on the US Federal Reserve to maintain loose monetary policy to support the country’s continued labor market recovery.
On Wednesday, Fed policymakers, led by Chief Jerome Powell, reiterated that they are willing tolerate an inflation trend above their 2% target rate for an extended period if that’s what it takes to get as many Americans back to work as possible. But the Fed has advanced its timetable for possibly raising interest rates – which is slowing job creation – to 2023 from 2024.