US jobless claims near 18-month low

The number of Americans filing new claiams for jobless benefits fell last week to the lowest level in nearly 18 months, offering more evidence that job growth was being hindered by labour shortages rather than cooling demand for workers.

Initial claims for state unemployment benefits dropped 35,000 to a seasonally adjusted 310,000 for the week ended Sept. 4, the labour Department said on Thursday.

That was the lowest level since mid-March 2020 when mandatory closures of nonessential businesses were enforced to slow the first wave of COVID-19 cases. Economists polled by Reuters had forecast 335,000 applications for the latest week.

Claims have dropped from a record 6.149 million in early April 2020. They, however, remain above the 200,000-250,000 range viewed as consistent with healthy labour market conditions.

The claims report, the most timely data on the economy’s health, suggested the labour market was holding up, despite a resurgence in infections, driven by the Delta variant of the coronavirus. Rising infections contributed holding back job growth in August, with nonfarm payrolls increasing only 235,000, the smallest gain since January. Payrolls surged 1.053 million in July.

“With Delta cases appearing close to a peak in the United States, we expect hiring to pick back up in September, although the pace of job growth is unlikely to return to the robust pace of early summer,” said Sarah House, a senior economist at Wells Fargo in Charlotte, North Carolina.

Government data on Wednesday showed job openings surged to a record 10.9 million at the end of July.

About 8.4 million people are officially unemployed. This labour market imbalance has been blamed on lack of affordable childcare, fears of contracting the coronavirus, generous unemployment benefits funded by the federal government as well as pandemic-related retirements and career changes.