Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

U.S. weekly jobless claims at 14-month low; inflation heating up

EconomyMay 13, 2021 04:11PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: People line up outside a newly reopened career center for in-person appointments in Louisville, U.S., April 15, 2021. REUTERS/Amira Karaoud/File Photo 2/2

By Lucia Mutikani

WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment benefits dropped to a 14-month low last week as companies held onto their workers amid a growing labor shortage that helped to curb employment growth in April.

The scramble for workers comes as the reopening economy is experiencing a boom in demand, resulting in widespread shortages of inputs at factories and fanning inflation. Producer prices increased more than expected in April, leading to the biggest annual gain since 2010, other data showed on Thursday.

The worker shortage is despite nearly 10 million Americans being officially unemployed, a disconnect that economists expect will resolve in the coming months as increased vaccinations ease COVID-19 stress and enhanced unemployment benefits expire, allowing some workers to return to the labor market.

"With demand for workers high and layoffs relatively low, we should see strong hiring in the months to come, as barriers to employment, such as lack of childcare, lessen," said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia. "For many, especially low-wage workers, returning to a job is a puzzle in which several pieces, such as transportation, wage levels and benefits must fall into place."

Initial claims for state unemployment benefits dropped 34,000 to a seasonally adjusted 473,000 for the week ended May 8, the Labor Department said. That was the lowest since mid-March 2020, when mandatory closures of nonessential businesses were enforced to slow the first wave of COVID-19 infections.

Economists polled by Reuters had forecast 490,000 applications for the latest week. The decrease in claims was led by Michigan, New York and Florida.

Claims have dropped from a record 6.149 million in early April 2020, but remain well above the 200,000 to 250,000 range that is viewed as consistent with a healthy labor market.

Some economists believe the enhanced unemployment benefits programs, including a weekly $300 government subsidy, could be encouraging some people to attempt to file a claim for assistance, though not every application is approved.

The economy created 266,000 jobs in April after adding 770,000 in March, which was partly blamed on the generous unemployment benefits. There are a record 8.1 million open jobs.

Several states in the South and Midwest, such as Tennessee and Missouri, that have unemployment rates below the national average of 6.1% have recently announced they will end federally funded pandemic unemployment benefits next month.

Economists cite the still-bloated jobless rolls as supporting the thesis that unemployment checks were keeping some workers home. There were 3.655 million people receiving benefits after an initial week in the week ended May 1, down 45,000 from the prior week. A total 16.9 million people were collecting unemployment checks under all programs at the end of April.

The government-funded benefits end in early September.

Richmond Federal Reserve president Thomas Barkin said on Thursday, "the question of how to unclog the labor market is going to be a critical one," in keeping the recovery on track.

Stocks on Wall Street rebounded on the claims data after declining for three straight sessions. The dollar was steady against a basket of currencies. U.S. Treasury prices rose.

DEMAND BOOM

The government has provided nearly $6 trillion in pandemic relief over the past year. More than a third of the population has been fully vaccinated, leading many states to lift most capacity restrictions on businesses.

The resulting pent-up demand is pushing against supply constraints. In another report on Thursday, the Labor Department said its producer price index for final demand rose 0.6% in April after surging 1.0% in March.

A 0.6% increase in the cost of services accounted for about two-thirds of the rise in the PPI. Services, which increased 0.7% in March, were last month driven by higher prices for portfolio management, airline tickets and food retailing as well as physician care.

Goods prices gained 0.6%, lifted by an 18.4% jump in steel mill products. In the 12 months through April, the PPI shot up 6.2%. That was the biggest year-on-year rise since the series was revamped in November 2010 and followed a 4.2% jump in March.

Part of acceleration in the PPI was due to last spring's weak readings dropping out of the calculation. The report followed on the heels of news on Wednesday that consumer prices increased by the most in nearly 12 years in April.

Though rising prices have spooked investors, the Federal Reserve has signaled it could tolerate higher inflation for some time to offset years in which inflation was lodged below its 2% target, a flexible average.

Fed Vice Chair Richard Clarida said on Wednesday it would be "some time" before the economy is healed enough for the U.S. central bank to consider scaling back its support. The Fed slashed its benchmark overnight interest rate to near zero last year and is pumping money into the economy through monthly bond purchases. Its preferred inflation measure, the core personal consumption expenditures (PCE) price index is at 1.8%.

"Each big inflation report for the next several months will test the Fed's approach to seeing through these issues it promises to be transitory," said Will Compernolle, a senior economist at FHN Financial in New York.

Based on the CPI and PPI data, Goldman Sachs (NYSE:GS) is forecasting that core PCE increased 0.49% in April and 3.38% year-on-year.

U.S. weekly jobless claims at 14-month low; inflation heating up
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (9)
Eddie Smith
Eddie Smith May 13, 2021 3:51PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Hard to take this economy/market/media/government seriously...Last week's headline: "Market up after terrible job report as rate hike fears ease." Yesterday's headline: "Market tanks due to rate hike fears after highest inflation rate since the 1970s." Today's headline: "Market euphoric after better than expect jobs report."...Tomorrow's headline: "Market sees biggest drop of the year as rate hike fears return."
William Bailey
William Bailey May 13, 2021 1:27PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
A 14 month low near the 2008 high !! The Ecomony is shinking folks from inflation , greed, Fed credit print and diminishing bond instraments to purchase .... Japan will have a partner in sputter soon
Brandon Bell
Brandon Bell May 13, 2021 1:03PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Hyperinflation and good jobs report, what possible negative consequence could this have in a market that is moved solely based on actions of the Fed with interest rates?
Tre Hsi
Tre Hsi May 13, 2021 1:03PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
"Based on the CPI and PPI data, Goldman Sachs is forecasting that core PCE increased 0.49% in April and 3.38% year-on-year."  -- so now 3.4% is hyperinflation, go figure
Edward Shaw
Edward Shaw May 13, 2021 12:39PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Just a week ago the market pumped due to a bad jobs report. How in the world is hyperinflation and fewer jobless claims good for the market if the market is pretty much just moving based on likelihood pf rate increase? This entire market bubble is reliant on the fiat bubble and interest rates staying at zero. They have to keep hyperinflating the currency to help wallstreet and eliminate the middle class for their socialist/communist agenda.
Joseph Armour
Joseph Armour May 13, 2021 11:56AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
In order to get people to go back to work, potential employers will raise wages. In order to pay those wages, potential employers will raise prices. Guess what happens next?
YouTube Account
YouTube Account May 13, 2021 11:03AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
"fell 34,000" - statistically insignificant, but yeah, let's throw a party
TL Chan
TL Chan May 13, 2021 10:34AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
jobless claim drop, that mean it is closer for Powell to raise rate, Nasdaq and expensive stocks logically should be depressed.
Dorian Roberts
Dorian Roberts May 13, 2021 10:23AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Things are getting better, but there are other factures that effect unemployment. I have been filling out applications for jobs but they have been denying me. Not giving me a chance and not trying to hire me. But I am just another black guy and I hear about these jobs but I have to put in 100 applications, just to get 10 interviews, and then just to get 3 job opportunities.
Mart Bab
Rubberduck1973 May 13, 2021 9:20AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Some economists believe? Believe is what you do in church. A lot of people have a very negative view of the average Joe. Maybe if you cared a bit more about their well being, the will care a bit more about your company. Pay then a good salary, provide held insurance and child care and everybody will gladly stay in their job even if the circumstances are hash. But instead you pay them nothing and buy a boot for yourself off about 500 million. The they will say f your company and take anything beter.
Dorian Roberts
Dorian Roberts May 13, 2021 9:20AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
You meant yacht and Jeff Bezo, but like they saw you get paid on the job you do, none of these jobs were meant to live off of. If some of these older people would find higher paying careers instead of looking for easy jobs. Our economy would be far better because the younger generation can get their first jobs.
Tre Hsi
Tre Hsi May 13, 2021 9:20AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
." A lot of people have a very negative view of the average Joe...."  -- yes that's why grandpa Joe has a nearly 60% approval rating, compare to the <45% Trump averaged in his presidency
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email