The number of Americans submitting new claims for unemployment benefits rose unexpectedly last week, even as the labor market continued to recover.
Preliminary claims for U.S. unemployment benefits increased 16,000 to 351,000 seasonally adjusted for the week ending Sept. 18, the Department of Labor said Thursday.
At the end of last August one of the Gulfs in the U.S. was hit by a powerful hurricane causing power generators in Louisiana to suffer damage and flooding around New York and New Jersey. This has to some extent been a factor in increasing the number of job demands.
On the other hand, economists forecast a total of 320.00 for the last week, but this expectation is far off. Overall, total unemployment claims have declined from a reading of 6.149 million in early April 2020, but are still above the 200,000-250,000 range seen in line with healthy labor market conditions.
The Fed on Wednesday has commented positively on economic developments so there is a likelihood of a reduction in bond purchases coming soon and signaled an interest rate hike may happen sooner than expected.
Employment growth slowed in August, with wages posting the smallest gain in seven months amid high layoffs for the holiday and hospitality sectors due to infections caused by the growing Delta Covid-19 variant.
Pandemic -related factors led to a shortage of workers, which constrained hiring. Fed Chairman Jerome Powell stated that he expects “faster job growth” as these factors will decrease.
The Fed expects the unemployment rate to be at 4.8% this year. That is up from the 4.5% rate targeted by the U.S. central bank in June.
