The number of American workers filing for unemployment benefits fell last week, dropping more sharply than economists expected, although experts say an elevated level of uncertainty remains around the recovery outlook.
First-time filings for unemployment insurance—a proxy for layoffs—came in at 326,000 for the week ending on Oct. 2, the Labor Department said in a statement (pdf). The consensus forecast was for 348,000 claims.
“After three straight weekly increases, new jobless claims have finally moved to the downside. The decline of 38,000 to 326,000 in seasonally adjusted new claims leaves them slightly above the pandemic-era low one month ago,” Bankrate senior economic analyst Mark Hamrick told The Epoch Times in an emailed statement.
The total number of Americans receiving some form of jobless assistance fell by around 855,000 for the week ending Sept. 18, a far more modest number than the 6.2 million the week prior, which was driven by the post-Labor Day expiration of federal pandemic aid programs.
Continuing claims, which run a week behind the headline number and represent people continuing to collect benefits after earlier making an initial filing, dropped by 97,000 to 2,714,000, touching a new pandemic-era low. This is the lowest level of continuing claims since March 14, 2020, when there were about 1.77 million claims.
While the expected path forward for the job market and the broader economy appears fairly upbeat, Hamrick said that a “higher-than-normal degree of uncertainty remains.”
“Some time ago, it was thought that the reopening of the economy might have been roaring by now. But supply chain challenges and the Delta variant provided new plot twists which slowed the recovery,” he said.
Bottlenecks and supply chain dislocations, which Federal Reserve officials recently acknowledged were proving more durable than previously thought, have led to a more persistent bout of higher price pressures, challenging the “transitory” inflation narrative.
Fed Chairman Jerome Powell said last week that he saw bottlenecks and supply problems “not getting better—in fact, at the margins, apparently getting a little bit worse.”
The Fed chief said he now expects inflationary pressures to continue into 2022, a position consistent with upward revisions to inflation expectations featured in the most recent economic projections from the Federal Open Market Committee (FOMC), the Fed’s policy-setting body. The committee now projects the Fed’s preferred inflation gauge, the so-called core PCE index, to rise 2.3 percent in 2022, up from an earlier forecast of 2.1 percent.
“While there are encouraging signs on the COVID front, supply chain issues may be persistent. The result is inflation at a higher pace than income improvement for many households, damaging to personal finances,” Hamrick said.
Overall, recent labor market indicators have been mixed.
A survey from the Conference Board last week showed that consumers’ views of current labor market conditions has deteriorated, while recent workforce activity data from payroll tracking firm Ultimate Kronos Group (UKG) showed that shift work in the United States declined for the second month in a row in September.
The Institute for Supply Management’s manufacturing employment gauge rebounded last month after contracting in August, but its measure of services industry employment slipped, with businesses reporting widespread labor shortages.
And while the U.S. economy remains around 5 million jobs down compared to before the pandemic, there are a record 10.9 million job openings and about 8.4 million unemployed.
Concerns have also been raised about the impact of the Biden administration’s COVID-19 vaccine mandate on labor market dynamics, with reports of people quitting rather than taking a vaccine.