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U.S. Labor Market Still Healing Even After Potential Setbacks

New data suggests that the United States’ labor market is still growing and healing, even though the market as a whole is still facing some potential setbacks. Recently, the latest weekly jobless claims rose for the first time in six weeks. While many economists believed that the number of people filing for unemployment benefits would continue to go down as the year progressed, this latest uptick has slightly worried some.

However, most economists expect these weekly numbers to continue to go down — even with last week’s uptick. Analysts stress that there is no need to worry just yet about this uptick, and looking at upcoming weeks’ numbers will help clarify exactly where the labor market stands. Analyzing June’s jobless numbers as a whole will also soon put things into perspective. 

While these latest jobless numbers and layoffs aren’t completely positive, other new data suggests that other parts of the labor market are doing well. Factory activity in the mid-Atlantic region is continuing to grow and has kept a steady pace in June as a whole. In fact, the measure of future production has even surged to the highest level it has been at in nearly 30 years.

Factories as a whole in the mid-Atlantic region are continuing to improve, according to the latest data. Hirings have also grown in factories, something which has been needed, which also signals to positive aspects of the labor market. 

So, while there was a recent uptick in layoffs this past week, other new reports signal that there may be no immediate need for concern. Previously, economists were worried, as people were still being laid off, though there also wasn’t a huge increase in new hirings, as expected. More and more people are being hired, though still well below what is needed to help the recent surge in the economy.

As the U.S. economy continues to reopen and surge, there has been a huge labor shortage that has affected all areas of the country. This labor shortage is likely for a slew of reasons — existing pandemic worries, lack of childcare which forces people to not return to work, and retirements and career transitions stemming from the pandemic. 

The labor market is, therefore, still struggling with employment growth. As a result, The Federal Reserve recently held its benchmark short-term interest rate near zero. The Federal Reserve also said that it will continue to inject money into the economy with monthly bond purchases. 

Elsewhere, more data signals that the labor market is still going through some growing pains as many strive to move on from the COVID-19 pandemic. According to the Philadelphia Fed, their business conditions index dipped to 30.7 for June, below their 31.5 reading from May. However, their measure of activity for the next six months has surged to a reading of 69.2 — the highest level since 1991. Just last month, this reading was at 52.7.

Factories as a whole expect to continue hiring more workers over the next six months, which will only help the labor market. However, continuing labor shortages, potential layoffs, and materials shortages could still keep the labor market from reaching the pre-pandemic goals many economists want to reach.

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