Wednesday, May 18, 2022

The US job market shows signs of improvement but still faces challenges

Due to the decline in the COVID-19 infection rate, fewer and fewer new people filed for unemployment benefits in the United States last week. However, as the winter storm caused severe damage to the southern states at the beginning of this month, the near-term outlook for the labor market is unclear.

Nonetheless, the decline in claims for the three-month low reported by the US Department of Labor on Thursday shows that the job market is slowly regaining traction after bottoming out at the end of 2020, catching up with the overall economy. Other data showed strong growth in demand for US-made goods in January.

The report immediately followed the press release last week, when retail sales in January increased the most in seven months.

The improvement in the economic situation reflects that the government provided nearly US$900 billion in pandemic relief at the end of December, and as the wave of coronavirus in the northern winter subsides, many service industries have reopened. It is unlikely that the $1.9 trillion recovery plan proposed by US President Joe Biden will be out of the consideration of the US Congress.

Chris Low, chief economist at FHN Financial in New York, said: “The data highlights the tremendous boost that the stimulus measures in December of last year have had on economic growth.” “The momentum of the next stimulus bill may be too strong. Unable to stop…Despite the strong economy, it still needs some expenditure.”

In the week ending February 20, the number of initial jobless claims in the United States fell by 111,000 to 730,000 after seasonal adjustments, the lowest level since November. According to a Reuters survey, economists’ applications in the past week were 838,000, while Bloomberg’s forecast was 825,000.

[Bloomberg]

Last week’s unadjusted claims (without considering seasonal factors) decreased by 131,734 to 710,313. The number of applications in Ohio has dropped sharply, which has been plagued by fraudulent applications. California claims have also declined.

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Last week, 1.2 million people made requests, including government-sponsored self-employed people, odd jobs and other programs that did not meet the normal national plan.

Although the claim amount has fallen from a record US$6.867 million during the US pandemic in March last year, it has remained above the peak of US$665,000 during the Great Depression in 2007-09, highlighting the damage caused by the virus.

Over the next week, stormy weather in the densely populated southern area may increase claims, where most of the southern part of Texas is in darkness with no water for several days. Unadjusted claims in Texas declined last week, probably because power outages prevented applications and processing.

Sarah House, a senior economist at Wells Fargo, said: “We are not surprised that the claim amount will rise next week due to weather-related backups, but the claim amount is expected to be 3 Over the course of the month, it began to decline with greater certainty.” Charlotte, North Carolina Securities.

Cautiously optimistic

Of the 22.2 million jobs lost during the pandemic, the economy has recovered 12.3 million. It is not expected that employment will return to pre-pandemic levels before 2024. Millions of Americans are experiencing long-term unemployment.

In the week ending February 13, the number of people receiving benefits after receiving the initial week of assistance fell by 101,000 to 4.119 million, but this is mainly due to people exhausting their eligibility for benefits, which is limited to 26 weeks in most states.

In the week ending February 6, at least 5.066 million people enjoyed long-term relief, an increase of 1 million over the previous period. If Congress does not pass the Biden government’s rescue plan, these government-funded benefits will expire in mid-March.

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In early February, according to all plans, about 1,904,300 people enjoyed unemployment benefits. But we have reason to remain cautiously optimistic about the labor market.

Daily coronavirus cases and hospitalizations have fallen to the last level before Thanksgiving and Christmas holidays, and the pace of vaccination is accelerating.

The US job market shows signs of improvement but still faces challengesIn the United States, the accelerated promotion of the COVID-19 vaccine helps increase retail sales and awareness of the labor market [Kevin Lamarque/Reuters]

The improvement in public health conditions contributed to the increase in retail sales in January. In February, households’ perceptions of the labor market also improved, driving the pace of economic growth this quarter.

Another report released by the Ministry of Commerce on Thursday showed that orders for non-defense capital products other than airplanes, an alternative to commercial spending plans that have received much attention, increased by 0.5% in January and 1.5% in December.

In January, these so-called core capital goods orders increased by 8.3% year-on-year, supporting manufacturing and accounting for 11.9% of the US economy. Shipments of core capital goods used to calculate equipment expenditures in the government’s gross domestic product (GDP) increased by 2.1%, after an increase of 1.0% in December.

Daniel Silver, an economist at JPMorgan in New York, said: “Although we still don’t understand much of the activity throughout the first quarter, we think the actual growth in equipment spending will be strong.”

Economists last week increased their estimates of gross domestic product (GDP) growth in the first quarter from a low annual rate of 2.3% to 6%, and the blowout retail sales data and the huge stimulus plan that the White House may launch indicate full approval.

The Ministry of Commerce said in its second estimate of GDP growth in the second quarter on Thursday that the economy grew 4.1% in the previous quarter. This is a slight increase from the 4.0% rate reported in January, and a sharp drop from the record rate of 33.4 in the third quarter.

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Nation World News Desk
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