The number of initial claims for unemployment benefits in the United States decreased last week. With the economic restart, the labor market has steadily recovered from the new crown pandemic, but the lack of a willing labor force may hinder accelerated employment growth in the short term.
Halfway through the second quarter, the economy seems to be growing steadily. Other data released on Thursday showed strong growth in corporate equipment spending in May. Although the merchandise trade deficit has widened, this is due to companies increasing imports in an effort to meet strong demand. The retailer’s warehouse is almost empty.
The Labor Department announced that as of the week of June 19, the number of initial jobless claims decreased by 7,000 after seasonal adjustments to 411,000. The previous week’s data was revised to 6,000 more applications than previously reported. The number of jobless claims in the previous week rose for the first time since the end of April, and economists blamed this on the volatility after the Memorial Day holiday on May 31.
Analysts surveyed had predicted that the number of initial jobless claims in the past week was 380,000. Initial unemployment benefits data may fluctuate in the coming weeks, as 26 states will end federally funded unemployment compensation programs, including unemployment compensation of $300 a week. Companies complain that these subsidies encourage the unemployed to stay at home. The planned end time starts on June 5th, and the latest is July 31st.
Fed Chairman Powell told members of Congress that he believes that employment growth will be strong in the fall. U.S. stocks rose, with the Nasdaq and S&P 500 both hitting historical highs. However, U.S. Treasury prices were mixed.
In addition to improving public health, the trillions of dollars in pandemic aid provided by the government are also supporting the economy. In another report on Thursday, the U.S. Department of Commerce stated that non-defense capital goods shipments, excluding aircraft, increased by 0.9% in May, after an increase of 1.0% in April.
In the government’s gross domestic product (GDP) calculations, this so-called core capital goods shipment is used to calculate equipment expenditures, but supply bottlenecks may slow the growth momentum.
Strong demand and tight supply have forced companies to switch to imports, thus widening the trade deficit. In the third report, the US Department of Commerce stated that the merchandise trade deficit increased by 2.8% in May to $88.1 billion. Wholesale inventories rose 1.1%, while retail inventories fell 0.8%. This mainly reflects a 5.3% decline in car inventories. The global semiconductor shortage hinders automobile production.
The expanding merchandise trade deficit and declining retail inventories have not changed economists’ strong expectations for GDP growth this quarter. They expect the annualized rate to reach about 10%. In the fourth report, the Ministry of Commerce confirmed that economic growth accelerated in the first quarter was helped by large-scale fiscal stimulus.
The annual rate of economic growth in the first quarter was confirmed to be 6.4%, the same as the initial valuation announced in May. The economic growth rate in the fourth quarter of last year was 4.3% on a month-on-month basis.