October 15, 2021

Investors Beware! 2 This Data Gives A Clearer Indication Of The Market Condition!

 The number of U.S. citizens submitting new claims for unemployment benefits fell nearly to a 19 -month low last week. This makes it clear that labor shortages are the main factor hampering the growth of the employment sector, rather than weak job demand.

Preliminary claims data for unemployment benefits fell 36,000 to a seasonally adjusted 293,000 for the week ended Oct. 9. The figure also far surpasses the forecasts of experts who are targeting 316,000 claims.

With a second consecutive weekly decline, unemployment claims are now in the range of 250,000-300,000 seen in line with a healthy labor market.

Last Friday, NFP readings only increased to just 194,000 jobs in September, the lowest figure in nine months. The increase in job growth was mostly due to labor shortages and skills gaps with employment data on Tuesday showing there were 10.4 million job opportunities at the end of August.

Labor shortages make the supply chain lower as there are fewer workers who produce raw materials and goods and send them to market, to cope with inflation.

In a separate report on Thursday, the Department of Labor reported the producer price index for final demand rose 0.5% in September after rising 0.7% in August. In the 12 months to September, the PPI increased to 8.6%.

The report follows news on Wednesday of a strong rise in consumer prices in September, driven by increases in food and rents as well as various other items.

The FOMC meeting earlier today showed that policymakers warned that the inflation rate may not be temporary.