U.S. unemployment benefits drop close to 19 - month low

U.S. unemployment benefits drop close to 19 - month low

A sign for a job fair is seen on 5th Avenue after the release of the employment report in Manhattan, New York City city.

The number of Americans filing new unemployment benefits fell close to a 19-month low last week, further evidence that a shortage of workers was behind slower job growth rather than weakening demand for labor.

The initial claims for state unemployment benefits dropped 36,000 to a seasonally adjusted 293,000 for the week ended Oct. 9. That level was low since mid March 2020, meaning that it was the lowest level in the world. Economists polled by Reuters had predicted 316,000 claims for the latest week.

Claims have dropped from a record high of 6.149 million in April 2020.

The government reported last Friday that nonfarm payrolls increased in September by the fewest employees, the lowest in nine months. The growth of employment growth is mostly due to a dearth of workers as well as a skill shortage, with government data on Tuesday showing there were 10.4 million job openings at the end of August.

Labor shortages, caused by COVID 19 pandemic, are also prevalent in other economies. With coronavirus infections driven by Delta variant declining and schools fully reopened for in-person learning, there is hope that more Americans rejoin the labor force.

The labor crunch will also ease in the months ahead, following the expiration of federal government-funded benefits in early September. But among increased self employment and substantial savings as well as early retirements, thanks to a strong stock market and record house price gains, the labor pool could remain shallow for a while.

The scarcity of labor is choking the supply chain because there are fewer workers to produce raw materials and goods as well as shipping them to markets, fanning inflation.

In a report on Thursday, the Labor Department said that its final price index for producer demand increased 0.5% in September after in August upped 0.7% to 0.3%. The PPI revised 8.6% in the 12 months through September, the largest gain year over year since November 2010 when the series accelerated after attrition 8.3% in August.

Economists polled by Reuters had forecast the PPI rising 0.6% on a monthly basis and growth of 8.7% year-on-year.

The report followed on the heels of news on September 29 of a solid increase in consumer prices driven by strong gains in food and rents as well as a range of other goods.

Minutes of the Federal Reserve's September 21 - 22 policy meeting shown on Wednesday showed some U.S. central bank officials expressed concerns that elevated rates of inflation could feed into longer-term inflation expectations for households and businesses.