The number of American workers applying for unemployment benefits fell last week to a new pandemic-era low, suggesting further tightening in the labor market as businesses boosted wages to attract and retain staff.
First-time filings for unemployment insurance—a proxy for layoffs—came in at 267,000 for the week ending Nov. 6, the Labor Department said in a report (pdf).
Continuing claims, which run a week behind the initial filings figure and reflect the total number of people receiving benefits through traditional state programs, rose by 59,000 to 2.16 million.
The jobless claims figures come as businesses continue to struggle to attract workers, boosting wages and offering perks to bring in badly needed staff.
The National Federation of Independent Business (NFIB) said in a Nov. 9 report that a net 44 percent of small-business owners reported boosting wages to attract and retain staff, the highest reading in the 48-year history of the series.
“One of the biggest problems for small businesses is the lack of workers for unfilled positions and inventory shortages, which will continue to be a problem during the holiday season,” NFIB chief economist Bill Dunkelberg said in a statement.
Average hourly earnings rose 4.9 percent in the year through October, a faster pace of wage growth than the 4.6 percent year-on-year increase last month, the Labor Department said in a separate Nov. 10 release (pdf). Still, with over-the-year consumer price inflation in October running at 6.2 percent, wages actually contracted by 1.3 percent in real terms.
The headline Consumer Price Index (CPI), a measure of inflation from the perspective of end consumers of goods and services, surged by 6.2 percent over the year and 0.9 percent over the month in October, according to a Nov. 10 report from the Bureau of Labor Statistics. That puts the pace of over-the-year consumer price inflation at its highest level since December 1990, when it rose by 6.3 percent.
“Inflation concerns are weighing on consumer confidence,” Bankrate Chief Economic Analyst Greg McBride told The Epoch Times in an emailed statement.
At 0.9 percent, the over-the-month pace of inflation is the highest since June 2021, which at the time was the fastest rate since 2008.
“When household costs rise faster than income, it puts the squeeze on buying power, which in turn holds back economic growth,” McBride said.
The U.S. economy expanded at a lackluster 2 percent in annual terms in the third quarter, the Commerce Department said in an Oct. 28 release. The deceleration from the 6.7 percent rate of GDP growth in the second quarter was driven chiefly by a slowdown in consumer spending.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 1.6 percent rate in the third quarter after a robust 12 percent pace of growth in the April–June quarter.
Another drag on growth was a resurgence of COVID-19 cases in the third quarter, which led to renewed restrictions and delays in the reopening of businesses and other establishments across parts of the country, according to the Commerce Department.
The decline in new infections in the United States has leveled off recently, raising concerns about a possible seasonal wave that could dampen economic growth.
“Any elongation of the pandemic and mitigation measures will prolong the supply-side recovery and further risk structural damage to the labor force,” Nick Reece, portfolio manager at Merk Investments, told The Epoch Times in an emailed statement.
The labor force participation rate, a measure of people working or actively looking for work, has been stuck at a historically depressed level. The Labor Department’s most recent jobs report, released Nov. 5, showed the labor force participation rate in October stood at 61.6 percent, unchanged from September but well below the pre-pandemic level of 63.6 percent in February 2020, and far off the historical peak of 67.3 percent in April 2000.
“We know from other recent data that the rate and number of individuals quitting their jobs have been at record levels,” Bankrate Senior Economic Analyst Mark Hamrick told The Epoch Times in an emailed statement. “A key question of the day is whether or when will these workers return, helping to address worker supply challenges.”
While the reason for the lagging labor force participation rate isn’t immediately clear, economists have cited COVID-19 fears among employees returning to the office, government assistance programs and policies, the stress of the pandemic prompting a spike in retirements and resignations, along with a lack of access to affordable child care.