Just 385,000 unemployment insurance claims were filed last week, according to the U.S. Department of Labor.
In the week ending July 31, the advance figure for seasonally adjusted initial claims was 385,000, a decrease of 14,000 from the previous week’s revised level. The previous week’s level was revised down by 1,000 from 400,000 to 399,000. The 4-week moving average was 394,000, a decrease of 250 from the previous week’s revised average. The previous week’s average was revised down by 250 from 394,500 to 394,250.
The advance seasonally adjusted insured unemployment rate was 2.1 percent for the week ending July 24, a decrease of 0.3 percentage point from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 24 was 2,930,000, a decrease of 366,000 from the previous week’s revised level. This is the lowest level for insured unemployment since March 14, 2020 when it was 1,770,000.
While all of the above looks pretty good, the national economy still has far to go and the headwinds are increasing. The Wall Street Journal reports,
U.S. jobless claims fell slightly to 385,000 last week, as worker filings for new unemployment benefits settled this summer at a level that is nearly double the pre-pandemic average.
The decrease in filings reported by the Labor Department on Thursday comes as the economic recovery faces risks from the Covid-19 surge driven by the Delta variant, supply-chain constraints and a shortage of available workers. The four-week moving average, which smooths out volatility in the weekly figures slightly decreased to 394,000.
So, weekly claims remain well above pre-pandemic numbers and resurgent pandemic concerns, supply-chain challenges, and a labor shortage present substantial risks for the pace of further recovery. More on the supply-chain issues from the Associated Press.
As countries locked down and families took refuge at home in February and March last year, companies sold off inventories and canceled orders from suppliers. And the economy did, in fact, collapse: In the United States, gross domestic product, the broadest measure of economic output, fell at a 31.2% annual rate from April through June 2020 — the worst quarter in records dating to 1947.
Then something unexpected happened.
“What nobody knew was that when you send everybody home, the first thing we all do is shop” online, said Lewis Black, CEO of Almonty Industries, which mines the rare metal tungsten. “You had, on one hand, inventories being run down and manufacturing ground to a halt, and on the other, people were spending like crazy.’’
Fueled by pent-up consumer demand, especially as vaccines allowed economies to reopen and families to get back outside again, growth roared back. The U.S. economy expanded at a stunning clip — a record annual rate of 33.8% from July through September 2020 — and kept chugging along, most recently registering a healthy 6.5% annual growth rate from April through June this year.
Suddenly, companies were overwhelmed with orders they couldn’t meet…
As companies hurried to meet surging demand, the cost of raw materials soared: The price of oil is up more than 70% over the past year, aluminum 55%. Tin prices have doubled. The price of high density polyethylene blow-molded plastic — common in bottles, fuel tanks, industrial drums and other products — has surged 157%, according to the Plastics Exchange spot market.
Freight costs shot up, too, as companies tried to book shipping containers. The Baltic Dry Index, which measures shipping costs, has rocketed more than 700% since mid-May 2020.
The WSJ piece provides more context, including optimism that employment will continue to rebound.
The Labor Department will separately release the July employment report on Friday that will show whether hiring accelerated last month. Economists polled by the Journal estimate that 845,000 jobs were created last month, similar to June’s total, and that the unemployment rate fell to 5.7%.
Benjamin Widner, an economics professor at New Mexico State University, also expects job growth to continue, driven in part by industries that allow employees to work from home.
“IT technology, cybersecurity networks, all those types of remote-work jobs are going to be continuing to grow as we deal with the changing structure of the economy,” Mr. Widner said. He added that he also expects a slower decline in the number of weekly unemployment claims.
The AP also covers today’s announcement, noting state policy actions in response to the labor shortage.
Companies are posting job openings — a record 9.2 million in May — faster than applicants are showing up to fill them. Many states have responded to business complaints of a labor shortage by ending expanded federal unemployment benefits meant to ease financial strains from the health crisis, including an extra $300 a week on top of traditional state benefits. The federal benefits are scheduled to expire nationwide Sept. 6.
Things are improving, more slowly than anyone would like. And the pandemic still exercises some control over the economy.