Strengthening labor market conditions impacted the number of Americans filing new claims for unemployment benefits, as the figure dropped below 400,000 last week, for the first time since the Covid-19 pandemic began more than a year ago.
For their part, private payrolls rose to the highest in 11 months in May, as they were driven by solid demand supported by the reopening of the economy. Job growth accelerated last month, but labor and raw material shortages continue to threaten the job market recovery, Reuters reported.
In this regard, Rubeela Farooqi, chief US economist at High Frequency Economics in White Plains, New York, commented that the economic reopening will favor job growth, but the imbalances between supply and demand may be “an obstacle in the short term”.
Initial claims for state unemployment benefits fell from 20,000 to 385,000, considered the lowest since mid-March 2020. The Reuters poll had forecast 390,000 claims for the past week.
The return to normality supported by the increase in vaccines has allowed the authorities to lift restrictions on companies to speed up economic opening, which is what has led to an increase in demand that puts pressure on the limitations of the job offer .
Reuters notes that a claim level for a healthy labor market considers between 200,000 and 250,000 and that despite claims remaining well above the range, have fallen from a record of more than 6 million in early April 2020.
Claims are expected to decline further, as Republican governors in 25 states, including Florida and Texas, are scheduled to suspend federal unemployment benefits for their residents beginning June 5.
Together these states account for more than 40% of the workforce, so around 4 million workers will be affected. Although some doubt that an early termination of these benefits will lead to an increase in hiring and warn that economic growth could slow.
The Federal Reserve’s “Beige Book” finds that it remains difficult for many companies to hire new workers, despite the fact that nearly 10 million Americans are officially unemployed.
With information from Reuters
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