US jobless claims falling

    US jobless claims falling

    The number of Americans filing new unemployment benefits is likely to have fallen to a 15-month low last week, with consumer prices rising further in May as a pandemic easing in the economy continues to boost demand.

    The Labor Department is likely to report on Thursday that initial claims for state unemployment benefits rose to a seasonally adjusted 370,000 for the week ended June 5, up from 385,000 last week, according to a Reuters poll of economists.

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    This would be the lowest since mid-March 2020, when the first wave of Covid-19 infections passed through the country, leading to the closure of unnecessary businesses and marking the sixth consecutive weekly drop. Layoffs are declining as employers try to work as millions of unemployed Americans remain at home due to the problem of childcare, generous unemployment benefits and prolonged fears about the virus, although vaccines are now widely available.

    At least half of the US adult population has been vaccinated against the virus, allowing wider economic recurrence. However, the fivefold demand launched by the resumption of business activities puts a strain on the supply chain and reduces inflationary pressures.

    Economists expect another report from the Labor Department on Thursday is likely to show that the consumer price index rose 0.4% last month after rising 0.8% in April, the biggest gain since June 2009. .

    In the 12 months to May, the CPI is projected to accelerate by 4.7 percent. This would be the largest annual increase since September 2008 and will follow a 4.2% increase in April. The expected jump will partly reflect the fall of last spring’s weak measurements from the calculation. These so-called key results are expected to decline in June.

    Inflation could also be boosted by wage-raising employers competing for fewer workers, despite employment still being 7.6 million jobs below the February 2020 peak. There are a record 9.3 million vacancies that have not been filled.

    Wages rose 0.5% in May, with huge gains in leisure and hospitality.

    The acceleration of inflation will not have an impact on monetary policy. Federal Reserve Chairman Jerome Powell has repeatedly said that higher inflation will be temporary.

    The US Federal Reserve cut its overnight benchmark interest rate to almost zero last year and is channeling money into the economy through monthly bond purchases.

    The Fed has said it could tolerate higher inflation for some time to offset the years in which inflation fell below the 2 percent target, a flexible average. The preferred measure of inflation, the Consumer Price Index (PCE), excluding volatile food and energy components, increased by 3.1% in April, the largest increase since July 1992.

    “We have not yet seen the peak of inflation, but it should happen this quarter, although existing pressures should keep pace with the year rising for the rest of 2021,” said Sam Bullard, senior Economist at Wells Fargo in Charlotte, North Carolina.

    “We expect inflation to slow more significantly in the last half of 2022, but with inflation expectations continuing to remain stable, core PCE inflation is expected to remain above 2.0 percent through our forecast horizon.”

    Although redundancies are declining, initial claims remain well above the range of 200,000 to 250,000 considered to be in line with healthy labor market conditions. Claims, however, fell from a record 6,149 million in early April 2020.

    Further cuts in applications are possible as Republican governors in at least 25 states, including Florida and Texas, cut off federally funded unemployment programs from Saturday.

    These states represent about 40% of the economy. Early termination benefits include a $ 300 weekly unemployment benefit, which businesses say discourages the unemployed from looking for work.

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