US unemployment claims fell to their lowest level in 20 months. This suggests that the American economy is on the path to recovery once again. While public health, particularly on COVID-19, is improving, supply chain disruptions remain.
US Unemployment Claims Fall To Lowest Levels Since March 2020
The Labor Department reported that US unemployment claims totaled 269,000 for the week ending October 30. This is 14,000 lower than the previous month.
In addition, the number is the lowest level since mid-March 2020. Last year, the government forcibly closed all business establishments in an effort to slow down the rampaging coronavirus.
For the past five weeks, US unemployment claims declined. Significant declines in Missouri and Florida managed to offset jobless claim spikes in California and Kentucky.
The Bluegrass State had to deal with a number of layoffs due to idle motor vehicle production. The global shortage of semiconductor chips is delaying the production and release of new cars.
Tightening Labor Market
Meanwhile, the tightening labor market helped increase wages for workers. Companies are now trying to outbid one another for the services of available workers.
As a result, labor costs surged in the 3rd quarter. In return, this affected productivity, which decreased at its steepest pace in the last 40 years.
Claims, which recorded a high of 6.148 million in April 2020, is now nearing normal levels. In fact, the 269,000 US unemployment claims are consistent with the numbers generated by a healthy labor market.
Gus Faucher, the chief economist at PNC Financial, said that companies are determined to retain their workers amid tight supply. “Firms are reluctant to lay off workers with strong demand and labor in short supply.
The big open question is what is happening to the millions of people who lost their benefits in September, or saw their benefits drop.”
Lowest Levels Of Americans Still Receiving Unemployment Benefits
Meanwhile, the number of Americans still receiving unemployment benefits after an initial week totaled 2.105 million for the week of October 23. This represents a decrease of 134,000 compared to the previous month.
It is also the lowest level of jobless claims since March 2020. Compared to September, the number of Americans receiving financial assistance went down by 75%.
The reduced US unemployment claims also signal an improving labor market for the US. The October jobs report is this Friday. This early, economists are predicting that nonfarm payrolls rose by 450,000 jobs.
In contrast, only 194,000 jobs were filled last September. This also signals that private payrolls are poised to increase their labor spending by hiring more workers. T
he ADP National Employment Report on Wednesday showed strong growth in private payrolls in October. During the month, the labor market differential hit a 21-year high. Data on consumers' views on whether jobs are plentiful or hard to get set the differential.
Due to the improving economy, the government is preparing to cut the economy loose from its safety measures. The Federal Reserve announced it will start scaling back its support for the US economy.
Earlier this week, they announced that they will cut their bond purchases by $10 billion beginning this November. However, the Fed said that they will keep interest rates at near-zero levels until next year at the earliest.
While concerns about a lack of laborers continue to plague the markets, the markets remain upbeat. Wall Street stocks posted an uptick.
Even the almighty dollar is enjoying the renaissance. Yesterday, the US dollar rose against a basket of currencies.
Labor Market Needs More Workers
But relentless worker shortages remain an obstacle. Caregiving needs during the pandemic, fears of contracting the coronavirus, early retirements and career changes as well as an aging population left businesses with 10.4 million unfilled jobs as of the end of August.
Federal Reserve Chairman Jerome Powell remained upbeat. “These impediments to labor supply should diminish with further progress on containing the virus, supporting gains in employment and economic activity,” he said.
Watch the CNBC Television video reporting that jobless claims hit another pandemic-era low at 269,000:
Do you agree that the US economy is now making a comeback? What do you think happened that caused US unemployment claims to fall?
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