Even with slight drop, state unemployment claims filings remain high; national industrial production and retail sales slump.

Unemployment claims filings fell a bit last week, but remain well above the pre-Covid levels, reports the Seattle Times. 

Washingtonians filed 11,302 new, or “initial,” claims for jobless benefits in the week ending Saturday, according to data posted Thursday by the state Employment Security Department. That’s down 2.8% from the prior week, but well above the prepandemic level from the same week in 2020. 

As we reported yesterday, claims filing were up significantly nationally last week, a sign of lingering pandemic and supply chain problems (we recognize those factors are related). ST business reporter Paul Roberts writes,

In Washington, the elevated claims likely reflect how recent extreme weather put extra pressure on sectors, such as construction, farming and manufacturing, that were already seeing normal seasonal layoffs, said Anneliese Vance-Sherman, an ESD regional economist. 

But the increase could also reflect “a significant rise in the number of COVID-19 cases” reported last week by the state Department of Health, Vance Sherman added.

In other news suggesting the economy remains on a halting path to recovery, retail sales and industrial production were both down last month, though both posted gains over the quarter.

The Census Bureau reports on retail sales,

Advance estimates of U.S. retail and food services sales for December 2021, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $626.8 billion, a decrease of 1.9 percent (±0.5 percent) from the previous month, but 16.9 percent (±0.9 percent) above December 2020. Total sales for the 12 months of 2021 were up 19.3 percent (±0.5 percent) from 2020. Total sales for the October 2021 through December 2021 period were up 17.1 percent (±0.7 percent) from the same period a year ago.

Timing may have had an impact on December sales, as the AP reports

Retail sales fell a seasonally adjusted 1.9% in December from November when sales increased 0.3%, the U.S. Commerce Department said Friday. Sales rose 1.8% in October as shoppers, worried about product shortages, got a head start on their holiday buying. Still, retail sales surged 16.9% last month compared with December 2020, the Commerce Department said Friday. For all of 2021, sales spiked 19.3% compared with the previous year.

Spending declines were spread across numerous sectors. Department store sales fell 7%, restaurant sales slipped 0.8% and online sales fell 8.7% compared with the previous month, according to the report.

And from the Fed on industrial production.

Industrial production declined 0.1 percent in December. Losses of 0.3 percent for manufacturing and 1.5 percent for utilities were mostly offset by a gain of 2.0 percent for mining. For the fourth quarter as a whole, total industrial production rose at an annual rate of 4.0 percent. At 101.9 percent of its 2017 average, total industrial production in December was 3.7 percent higher than it was at the end of 2020 and 0.6 percent above its pre-pandemic (February 2020) reading. Capacity utilization for the industrial sector edged down 0.1 percentage point in December to 76.5 percent, a rate that is 3.1 percentage points below its long-run (1972–2020) average.

APs reports the pandemic and supply chain had an impact on the numbers,

Economists believe that industrial production will struggle to meet strong demand as long as problems affecting supply chains persist. There is concern that the surge in COVID-19 cases because of the omicron variant will result in shortages of factory workers, which could intensify supply chain problems.

“The latest surge in cases looks to be exacerbating labor problems,” said Oren Klachkin, lead U.S. economist at Oxford Economics. “While we expect bottlenecks to eventually loosen, we shouldn’t discount the risk that supply chain conditions could still worsen before they improve.”

Again, the uncertainty makes a case for lawmakers to focus on steps to strengthen our state’s economic recovery: easing tax and regulatory burdens, making infrastructure investments that will improve mobility, and focusing on budget sustainability.