The number of workers claiming unemployment benefits in the United States plummeted last week to levels unseen in more than 50 years, suggesting that businesses are keeping their employees in a tight labor market.
The Labor Department said in a report (pdf) that in the week ending November 19, the number of first-time applications for unemployment insurance – replacing layoffs – stood at 199,000. This is 71,000 less than the previous week’s revised 270,000 and well below the 260,000 consensus.
Apart from a new pandemic-era low and the eighth straight week, the number of jobless claims on Wednesday was also the lowest since November 15, 1969, when 197,000 were filed.
“It’s fair to say that we didn’t expect this. Getting new statements below 200,000 for the first time since the pandemic began is indeed important and signals further improvement, ”senior economic analyst Mark Hamrick told The Epoch Times in an email statement.
“Americans are heading into the heart of the holiday season with a reasonable expectation that an already tense job market will continue to shrink in the coming months,” he added.
Strong data on jobless claims comes as businesses continue to report hiring difficulties, with the latest report from the National Federation of Independent Businesses (NFIB) showing that 44% of small business owners reported pay increases to attract and retain staff. the highest in the series’ 48-year history.
“One of the biggest challenges for small businesses is a shortage of workers for unfilled vacancies and a shortage of inventory, which will remain a problem during the holiday season,” NFIB chief economist Bill Dunkelberg said in early November.
Average hourly wages rose 4.9 percent in the year to October, faster than the 4.6 percent year-on-year rise in wages last month, the Labor Department said in a November 10 (pdf) report. However, with consumer price inflation at 6.2 percent in October, real wages fell by about 1.3 percent.
The sign of a limited labor market suggests that labor force participation – a measure of the number of people working or actively looking for a job – is stuck at historically low levels. The latest Labor Department employment report released on November 5 showed that the economic activity rate in October was 61.6 percent, unchanged from September, but well below the pre-pandemic level of 63.6 percent in February 2020 and far from its historical record. peak. 67.3 percent in April 2000.
Commenting on Wednesday’s announcement of unemployment benefits, King’s College President and economist Mohamed El-Erian called the number “Good news for the economy,” but added that “the big question for the labor market remains the possibility of increasing labor force participation.”
While the reason for the low labor force participation rate is not immediately clear, economists cited concerns about COVID-19 among employees returning to office, government aid programs and policies, pandemic stress that caused a sharp rise in retirements and layoffs, and lack of access to affordable childcare.