US economy is regaining momentum as unemployment demands fall; production increases

People queue outside a newly opened career center for personal appointments in Louisville, USA, April 15, 2021. REUTERS / Amira Karaoud

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  • Weekly unemployment applications fall 1,000 to 268,000
  • Continued claims fall from 129,000 to 2,080 million
  • Factory activity in the mid-Atlantic is accelerating in November

WASHINGTON, Nov. 18 (Reuters) – The number of Americans filing new unemployment benefits fell close to pre-pandemic levels last week as the labor market recovery continues, though labor shortages remain an obstacle to faster job growth.

The weekly Unemployment Report from the Ministry of Labor on Thursday, the most timely data on the health of the economy, also showed that unemployment benefits fell to a low of 20 months in early November. The economy is regaining momentum after a hiatus over the summer when a wave of COVID-19 infections driven by the Delta variant hit the nation.

“Demand for labor is very strong and there is a shortage of workers, so layoffs are very low right now,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania.

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The first claims for state unemployment benefits fell by 1,000 to seasonally adjusted 268,000 for the week ending November 13th. It was the lowest level since the start of the coronavirus pandemic in the United States more than 20 months ago.

Economists polled by Reuters had predicted 260,000 applications in the past week. The smaller decline was due to the model used by the government to remove seasonal fluctuations from the data being less generous last week.

Unadjusted claims decreased from 18,183 to 238,850. The fall was led by Kentucky, likely due to car workers returning to the factories after temporary layoffs as motor vehicle manufacturers deal with a global semiconductor shortage. There were also large declines in Michigan, Tennessee and Ohio, states that also have a strong presence of automakers.

The decline offset an increase in applications in California.

The seventh consecutive weekly decline left claims just above the 256,000 level by mid-March 2020 and in a range associated with a healthy labor market. Claims have fallen from a record high of 6.149 million at the beginning of April 2020.

Unemployed demands

The improved economic tone was matched by other data from the Philadelphia Federal Reserve on Thursday, which showed an acceleration in production activity in the Mid-Atlantic region this month.

Factories in the region, covering eastern Pennsylvania, southern New Jersey and Delaware, reported strong order growth. They were optimistic about business conditions over the next six months and expected to maintain a strong pace of investment spending in 2022. However, labor shortages and raw materials continued, leading to a rapid accumulation of unfinished work, even as producers increased working hours for workers.

The factories continued to face higher prices for raw materials, which they passed on to consumers.

“We’re looking for voracious demand for goods and an abundance of unfilled orders to keep factories pumping out goods at a very healthy pace,” said Oren Klachkin, senior U.S. economist at Oxford Economics in New York. “We also expect companies to continue to face major supply chain problems next year, even as headwinds begin to ease in the second half of 2022.”

Shares on Wall Street were lower. The dollar slid toward a basket of currencies. US government interest rates fell.

Philly Fed

TIRED LABOR MARKET

The reports added to an increase in retail sales in October and a sharp recovery in factory production, suggesting that economic activity accelerated early in the fourth quarter, after gross domestic product rose at the slowest pace for more than a year in the period July-September . .

Stronger growth may spill over into 2022, with a third report from the Conference Board showing that its index of leading economic indicators jumped 0.9% in October after rising 0.1% in September.

Leading indicators

The labor market is becoming tighter. The number of people continuing to receive benefits after a first week of assistance fell from 129,000 to 2,080 million in the week ending November 6, the injury report showed. It was also the lowest level since mid-March 2020.

A total of 3.185 million people collected unemployment checks during all programs during the week ending October 30th. Falling unemployment lists raise hopes that more people will soon return to the workforce.

Millions of unemployed Americans remain at home even after the expiration of generous federal government-funded benefits, the reopening of schools for personal learning, and companies raising wages.

The injury data covered the period during which the government surveyed businesses for the non-agricultural wage component in the November employment report.

Applications have fallen since mid-October, indicating stronger employment growth this month. But workers are scarce, with 10.4 million job openings at the end of September.

“There’s some uncertainty, as the key to monthly job growth is the labor supply and the Delta variant,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania. “The good news is that the impact of the Delta variant on the labor market in November will be less than that seen under the teeth of the latest wave.”

The economy created 531,000 jobs in October. Employment growth has averaged 582,000 jobs per month this year, and the workforce has fallen 3 million from pre-pandemic levels.

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Reporting by Lucia Mutikani; Edited by Andrea Ricci

Our standards: Thomson Reuters trust principles.

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