An increase in unemployment claims last week may not be a big deal – some fluctuation should be expected – but, then again, concerns are rising as we move deeper into fall. The Department of Labor reports the uptick and the still-low four-week average.
In the week ending September 11, the advance figure for seasonally adjusted initial claims was 332,000, an increase of 20,000 from the previous week’s revised level. The previous week’s level was revised up by 2,000 from 310,000 to 312,000. The 4-week moving average was 335,750, a decrease of 4,250 from the previous week’s revised average. This is the lowest level for this average since March 14, 2020 when it was 225,500. The previous week’s average was revised up by 500 from 339,500 to 340,000.
The Associated Press report, however, notes the concerns.
Last week’s increase was small and may be temporary. The four-week average of jobless claims, which smooths out fluctuations in the weekly data, dropped for the fifth straight week to just below 336,000. That figure is also the lowest since the pandemic began…
The job market and the broader economy have been slowed in recent weeks by the delta variant, which has discouraged many Americans from traveling, staying in hotels and eating out. Earlier this month, the government reported that employers added just 235,000 jobs in August after having added roughly a million people in both June and July.
Hiring in August plummeted in industries that require face-to-face contact with the public, notably restaurants, hotels and retailers.
There’s the delta variant, of course, but also elevated worries associated with the labor shortage. Also from the AP,
The gulf between record job openings and a lack of people taking those jobs is forcing Wall Street to reassess the pace of the economic recovery.
Jobs were gutted during the pandemic and employment growth has been a closely watched gauge for investors. Increasing employment eventually results in increased consumer spending, which is the biggest driver of economic growth. Without the former, analysts have said, it will take longer than expected for the economy to operate at some semblance of a pre-pandemic normal.
“That time horizon keeps getting extended,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.
With job openings at a record high, a number of factors seem to be keeping prospective employees sidelined: Covid fears, child care, and skills mismatches among them.
“The developments in the labor market are among the more important in the world today,” Mayfield said, in a note to investors. “A lagging recovery will keep the Federal Reserve on the sidelines, but also limit economic growth.”
And, although the recent CPI numbers were better than expected, particularly after the jump last week in the producer price index, inflation still poses a further recovery risk. See, for example, this discussion from the Oregon Office of Economic Analysis.
We’re far from out of the woods, yet.