December 4, 2022

U.S. weekly unemployment demands fell sharply last week; Producer price increases in September by Reuters

© Reuters. Picture

By Lucia Hairy

WASHINGTON (Reuters) – The number of Americans filing new demands for unemployment benefits fell to a 19-month low last week, further indicating that labor shortages are behind job growth rather than weakening labor demand.

Initial claims for state unemployment benefits fell to 293,000 from 36,000 for the week ended October. This is the lowest level since mid-March 2020. Polls conducted by Reuters forecast 316,000 claims for the most recent week.

With the second consecutive weekly decline, demand is now at the upper end of the 250,000-300,000 range, which is in line with the healthy labor market. Claims fell to a record high of 6.149 million at the beginning of April 2020.

The government announced last Friday that the number of jobs had increased by at least 194,000, the lowest in nine months in September. The cold in job growth is largely due to a shortage of workers and a mismatch of skills, with government data showing on Tuesday that there were 10.4 million jobs by the end of August.

The labor shortage caused by the COVID-19 epidemic is higher than in other economies. It is hoped that more Americans will re-enter the workforce as corona virus infections driven by the delta variation decrease and schools reopen fully for personal learning.

The labor crisis will ease in the coming months following the expiration of federal funding benefits in early September. But amid increased self-employment and massive savings and early retirement, the labor pool will remain shallow for some time, thanks to a strong stock market and record home price gains.

Labor shortages are suffocating the supply chain because there are fewer workers to produce raw materials and goods to send them to markets and increase inflation.

In another report on Thursday, the labor sector raised its producer price index for final demand by 0.5% in September after advancing 0.7% in August. In the first 12 months of September, the PPI accelerated by 8.6%, and after a rise of 8.3% in August, the series was updated after November 2010.

Economists conducted by Reuters forecast that the PPI will gain 0.6% on a monthly basis and increase by 8.7% year-on-year.

The report follows Wednesday’s news, driven by sharp gains in consumer prices in September, strong gains in the range of food and rent and other items.

Minutes of the Federal Reserve’s September 21-22 policy meeting released on Wednesday, some U.S. central bank officials expressed concern that “high rates of inflation could feed long-term inflation expectations of homes and businesses.”

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