WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits fell to a fresh 19-month low last week, suggesting the economy was regaining momentum amid a significant improvement in public health, though supply constraints remain.
Initial claims for state unemployment benefits fell 14,000 to a seasonally adjusted 269,000 for the week ended Oct. 30, the Labor Department said on Thursday. That was the lowest level since the middle of March in 2020, when mandatory business closures were being enforced to slow the first wave of COVID-19 infections. Claims have now declined for five straight weeks.
The summer wave of infections driven by the Delta variant has subsided, encouraging more Americans to travel, dine out and frequent sporting venues among activities that were curtailed by the resurgence in cases.
The Delta variant and shortages of goods contributed to restricting economic growth to its slowest pace in more than a year last quarter. Claims, which have declined from a record high of 6.149 million in early April 2020, are now within a range that is generally viewed as consistent with a healthy labor market.
This augurs well for October’s employment report due on Friday. According to a Reuters poll of economists, nonfarm payrolls likely rose by 450,000 jobs last month. The economy created 194,000 jobs in September, the fewest in nine months.
Expectations for an acceleration in job gains were bolstered by the ADP National Employment Report on Wednesday showing strong growth in private payrolls in October. The Conference Board’s labor market differential – derived from data on consumers’ views on whether jobs are plentiful or hard to get – hit a 21-year high.
But relentless worker shortages remain an obstacle. Caregiving needs during the pandemic, fears of contracting the coronavirus, early retirements and careers changes as well as an aging population have left businesses with 10.4 million unfilled jobs as of the end of August.
Federal Reserve Chair Jerome Powell told reporters on Wednesday that “these impediments to labor supply should diminish with further progress on containing the virus, supporting gains in employment and economic activity.”
The Fed announced it would start trimming its monthly bond purchases this month.
There are concerns that the White House’s vaccine mandate, which applies to federal government contractors and businesses with 100 or more employees, could add to the worker shortages.
A report from on Thursday from global outplacement firm Challenger, Gray & Christmas showed job cuts announced by U.S.-based employers increased 27.5% in October to 22,822, the highest since May. It said 22% of the layoffs were people who refused to be vaccinated as per company requirements.
“We know companies are holding tight to their workers and are in fact looking for workers,” said Andrew Challenger, senior vice president at Challenger, Gray & Christmas “However, we also know that for many employers, a federal vaccine mandate is forthcoming, and for many government employees and contractors, as well as for health care providers, mandates already exist. This complicates hiring and retention efforts.”
(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)
