WASHINGTON, Oct 14 Reuters - The number of Americans filing new claims for unemployment benefits dropped 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.
Initial claims for state unemployment benefits reduced 36,000 to a seasonally adjusted 293,000 for the week ended Oct. 9. That was the lowest level since mid-March 2020. Economists polled by Reuters predicted 316,000 claims for the latest week.
Claims dropped from a high of 6.149 million in early April 2020.
The government reported this Friday that nonfarm payrolls have increased by only 194,000 jobs in September, the minimum in nine months. The cooling in employment growth is partly due to a lack of workers as well as skill mismatch, with government data on Tuesday showing that there were 10.4 million job openings at the end of August.
Labor shortages, caused by the COVID - 19 pandemic, are also prevalent in other economies. With the Delta variant declining and schools fully reopened for in-person learning, there is hope that more Americans will rejoin the labor force.
The labor crunch could also ease in the months ahead following the expiration of federal government-funded benefits in early September. However, amid higher self employment and massive savings as well as early retirements, thanks to a strong stock market and record house price gains, the labor pool may remain shallow for a while.
The scarcity of labor is choking up the supply chain because there are fewer workers to produce raw materials and goods as well as shipping them to markets, fanning inflation.
In another report from on Thursday, Labor Department stated its producer price index for final demand increased 0.5% in September after advancing 0.7% in August. In the 12 months prior to September, the PPI accelerated 8.6%, the largest year-on-year advance since November 2010 when the series was revamped, after surging 8.3% in August.
Economists polled by Reuters forecast the PPI to increase on a monthly basis and gain 8.7% year-on-year, giving rise to 0.6%.
The report followed on the heels of news on Wednesday about a solid rise in consumer prices in September, driven by strong gains in food and rents as well as a variety of other goods.
Minutes of the Federal Reserve's Sept 21 - 22 policy meeting published on Wednesday showed some U.S. central bank officials expressed concerns that elevated rates of inflation could feed into longer-term inflation expectations of households and businesses.