Initial Unemployment Claims Beat Expectations By Falling To 293,000

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US jobless claims have declined significantly over the course of 2021 thanks to Covid-19 vaccines, but are not yet at their pre-pandemic level
US jobless claims have declined significantly over the course of 2021 thanks to Covid-19 vaccines, but are not yet at their pre-pandemic level

The number of initial unemployment claims in the U.S. has fallen for a second week in a row to the lowest level since the start of the COVID pandemic, as reported by the Department of Labor on Thursday. 

In the new report, the number of initial jobless claims was 293,000, below the Dow Jones estimate of 318,000 and 36,000 less than the previous week ending on Oct. 9. 

In a positive sign for the economic recovery, this is the first time these initial claims fell below 300,000 since the COVID-19 pandemic shot unemployment claims into the millions. Before the virus began tearing a path across the economy, the number of initial unemployment was 256,000 for March 14, 2020. 

The latest numbers add more weight to the idea that the U.S. labor market is now adjusting to the end of federal unemployment benefits on Labor Day last month. After they ended on Sept. 6, initial claims for unemployment rose and they continued to do so throughout September before falling on the week ending on Sept. 25.

Last week’s initial claims, while breaking what was a three week trend of rising claims, had its number revised slightly from 326,000 to 329,000. 

In terms of continuing claims, which accounts for numbers up in the preceding the week of Sept. 25, the figure fell 523,426 to 3,649,013. The 4-week moving average was 334,250, beating the previous week's number for the lowest amount of continuing claims since the pre-pandemic period.

These numbers arrive as policymakers begin to become more focused on the dangers from rising inflation. The latest data for the Consumer Price Index, a key inflation measurement, showed that prices for goods, particularly food, rent and energy, rose as year-on-year inflation averaged at 5.4%, the highest since January 1991. 

It also follows a weaker than anticipated jobs report for September that has prompted concerns that the economic recovery may be slowing. 

The Federal Reserve, however, appeared unphased by the poor jobs numbers as it inches closer to a tapering of its $120 billion per month asset purchase program that began during the pandemic.

Fed officials, including Chairman Jerome Powell, have voiced concerns about inflation but they maintain a position that it is transitory and will ease once global supply chain bottlenecks are reduced.

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