Grocery store workers represented by the United Food and Commercial Workers International Union hold a boycott rally in front of a supermarket in Los Angeles on Wednesday. Agence France-Presse
The number of Americans filing new claims for unemployment benefits fell more than expected last week as companies held onto their workers amid a growing labour shortage that helped to curb job growth in April.
The scramble for workers comes as the economy is experiencing a boom in demand, resulting in widespread shortages of inputs at factories and fanning inflation. Producer prices increased more than expected in April, leading to the biggest annual gain since 2010, other data showed on Thursday.
Initial claims for state unemployment benefits fell 34,000 to a seasonally adjusted 473,000 for the week ended May 8, the labour Department said. That was the lowest since mid-March 2020, when mandatory closures of nonessential businesses were enforced to slow the first wave of COVID-19 infections.
Economists polled by Reuters had forecast 490,000 applications for the latest week. The decrease in claims was led by Michigan, New York and Florida.
Though job openings are at a record 8.1 million and nearly 10 million people are officially unemployed, companies are scrambling for labour. Layoffs are at all-time lows.
Generous unemployment benefits, fears of catching COVID-19, parents staying home to care for children and raw material shortages as well as pandemic-related retirements and career changes have been blamed for the disconnect. The economy created 266,000 jobs in April after adding 770,000 in March, the government reported last week.
Some economists believe the enhanced unemployment benefits programs, including a weekly $300 government subsidy, could be encouraging some people to attempt to file a claim for assistance, keeping claims well above the 200,000 to 250,000 range that is viewed as consistent with a healthy labour market.
Jobless claims have dropped from a record 6.149 million in early April 2020. Several states in the South and Midwest, such as Tennessee and Missouri, that have unemployment rates below the national average of 6.1% have recently announced they will end federally funded pandemic unemployment benefits next month.
The number of people receiving benefits after an initial week of aid fell 45,000 to 3.655 million in the week ended May 1. Some people are finding work, while others are exhausting their eligibility for benefits, limited to 26 weeks in most states. About 5.3 million people were on extended benefits during the week ended April 24.
Another 433,209 were on a state programme for those who have exhausted their initial six months of aid. At least 16.9 million people were collecting unemployment checks under all programs at the end of April.
The government has provided nearly $6 trillion in pandemic relief over the past year. More than a third of the population has been fully vaccinated, leading many states to lift most capacity restrictions on businesses.
The massive fiscal stimulus and improving public health have unleashed a demand boom that is pushing against supply constraints, resulting in an acceleration in inflation.
In another report on Thursday, the labour Department said its producer price index for final demand rose 0.6% in April after surging 1.0% in March. A 0.6% increase in the cost of services accounted for about two-thirds of the rise in the PPI.
Services increased 0.7% in March. Goods prices gained 0.6% last month after surging 1.7% in March.
In the 12 months through April, the PPI shot up 6.2%. That was the biggest year-on-year rise since the series was revamped in November 2010 and followed a 4.2% jump in March.
The year-on-year PPI was boosted as last spring’s weak readings start dropping out of the calculation.
The government reported on Wednesday that consumer prices increased by the most in nearly 12 years in April, reflecting bottlenecks in the supply chain and strong demand for tourism-related services as the economy reopens.
Signs that inflation is heating up have left investors fearing the Federal Reserve could raise interest rates sooner than expected. But Fed Vice Chair Richard Clarida said on Wednesday it would be “some time” before the economy is healed enough for the US central bank to consider scaling back its support.
US STOCKS REBOUND: US shares rebounded on Thursday after falling for three consecutive days and benchmark Treasury yields edged lower as investors snapped up technology stocks and shrugged off worries over rising prices, for now.
By early morning, the Dow Jones Industrial Average rose 1.5%, the S&P 500 was up 1.4%, and the Nasdaq Composite jumped 1.3%.
Yields on 10-year Treasuries, which had climbed 7 basis points overnight in the biggest daily rise in two months, edged lower in early trade to stand at 1.6744%.
Oil prices fell on Thursday despite a sharp drop in US crude inventories, as market participants took profits following days of buying spurred by a cold snap in the largest US energy-producing state.
Brent crude fell 2.4% 2020, while US West Texas Intermediate crude dropped 2.6%.
The number of Americans filing new claims for unemployment benefits dropped to a one-year low last week as economic activity rebounds after weather-related disruptions in February.
America’s employers added just 266,000 jobs last month, sharply lower than in March and a sign that some businesses are struggling to find enough workers as the economic recovery strengthens.
US employment increased far less than expected in November, likely as millions of unemployed Americans remained home despite companies boosting wages,
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Sheikh Maktoum made these remarks as he launched the Dubai Family Business Management Programme, a project of the Dubai Centre for Family Businesses, which operates under the umbrella of Dubai Chambers.