The number of North Americans who entered with new jobless claims it fell last week as the job market gathers strength, but labor shortages are frustrating companies’ efforts to increase hiring to meet strong demand for goods and services.
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Initial jobless claims fell by 26,000 to a seasonally adjusted figure of 360,000 in the week ending July 10, the Labor Department said on Thursday. Economists polled by Reuters were forecasting 360,000 new orders for the last week.
Applications have struggled to improve since they dropped to below 400,000 at the end of May, even as at least 20 US states run by Republican governors pulled out of US government-funded unemployment benefit programs.
The early termination of the federal programs came after companies complained that benefits, including a weekly check for $300, were encouraging unemployed Americans to stay at home. The economy faces a shortage of workers, with a record 9.2 million openings at the end of May.
About 9.5 million Americans are officially unemployed. The incongruity was also attributed to the lack of accessible day care centers, fear of contracting the virus, as well as career changes and pandemic-related pensions. So far, there is little evidence that the early termination of federal benefits, which began June 12 and runs through July 31, has caused an increase in job search.
For the rest of the country, the expanded benefits will expire on September 6th. Federal Reserve chairman Jerome Powell told lawmakers on Wednesday he expected “job gains to be strong in the coming months as public health conditions continue to improve and some of the other pandemic-related factors currently weighing on decrease”.
The latest report in the Fed’s Beige Book, a compilation of reports from companies across the country, showed that demand for labor is widespread but “stronger for low-skilled jobs,” noting that “companies in multiple districts expect the difficulty of finding workers to extend into early autumn (northern hemisphere).”
Aid applications fell from a record 6,149 million in early April 2020, but remain above the 200,000 to 250,000 range that is seen as consistent with healthy labor market conditions.
Part of the recent rise in orders has been attributed to the so-called “seasonal factor”, which the government uses to eliminate seasonal fluctuations in the data.