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Jobless claims drop, market experts point to improving economy

18:32, 7 October 2021

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Jobless claims
Jobless caims - Photo: Shutterstock

The US labour market is on the mend as unemployment claims decrease for the first time in four weeks.

The latest data compiled by the US Department of Labor shows the advance figure for seasonally adjusted initial claims was 326,000 for the week ending on 2 October, a decrease of 38,000 from the previous week's revised level.

Although the report highlighted a decrease in weekly claims, the number of people applying for unemployment benefits has not returned to pre-pandemic levels in the low 200,000s.

Wall Street reply

By mid-day Thursday, the Dow Jones Industrial Average was up 528.50 points, or 1.5%, to 34,945.49, the S&P 500 rose 64.32 points, or 1.5%, to 4,427.87, while the Nasdaq Composite shot 64.32 points higher, or 1.5% to 4,427.87.

Industry perspective

In an interview with Capital.com, Joey Von Nessen, a research economist at the University of South Carolina’s Darla Moore School of Business, said, “The steady decrease in unemployment insurance claims point to a strengthening labour market as the US economy continues to recover from the pandemic-induced recession.”

“The labour market must be considered from the perspective of both workers and employers,” he said. “For workers, the job market is arguably the best in over a decade with record levels of openings and an unemployment rate that has dropped by 9.6 percentage points in the last 16 months.”

From an employer’s vantage point, Nessen said the tight labour market has generated a worker shortage, which has become a major source of production limitations that result in supply shortages for goods across many sectors.

 “The labour shortage is putting upward pressure on wages as companies look for ways to attract new employees, which prevents inflation from quickly returning to pre-pandemic levels,” he said. “The decline in unemployment insurance claims reflects an improving labour market, but the labour shortage and elevated prices that employers and consumers face highlight the multiple economic headwinds remaining ahead of us.”

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Report highlights

California saw the largest drop in new jobless claims, falling over 10,000 based on unadjusted numbers.

Throughout the US, the number of people collecting state jobless benefits lost 98,000 to a seasonally adjusted 2.71 million.

As of 18 September, 4.17 million people were reportedly receiving jobless benefits through eight separate state or federal programs.

Employment report due Friday

The US Department of Labor will release its latest statistics on the American job scene on Friday.

Wall Street economists predict US employers should have hired 500,000 unemployed Americans last month, nearly doubling the 235,000 new jobs recorded in August.

The unemployment rate is also predicted to drop to 5.1% from the 5.2% mark posted in August.

Read more: Mid-day: Dow adds over 500 points after US legislators make deal

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