The Labor Department’s latest report reveals that the weekly jobless numbers in the United States have fallen to a new 17-month low for the week that ended on August 14. These claims for unemployment benefits fell by about 29,000, hitting a seasonally adjusted 348,000 for the week as a whole. This latest report may signal that the labor market is attempting to work towards recovery, especially with reports that job growth for the month has grown again. However, the Delta variant of the COVID-19 virus has caused some problems for businesses as it has increased cases around the nation. This variant could, in turn, cause the labor market recovery to stumble.
The Labor Department also revealed that the number of people currently on the state jobless rolls has dropped as well, signaling that more people started new jobs at the beginning of August. Manufacturing employment also rose to new highs in the beginning of August in the mid-Atlantic region, according to the Labor Department.
However, there are still some problems that could affect the labor market recovery. For example, even though manufacturing employment rose to new highs, the pace of factory output growth slowed down for the fourth month straight. Raw materials have continued to affect manufacturers and factories, which has caused this slowing down. Plus, consumers for the past few months have switched from spending money on goods to now spending money on services. This has also, in turn, affected factory output.
Therefore, while the labor shortage may be slowly coming to an end in the United States, there is still a raw material shortage affecting so many businesses. In some industries, this material shortage may work out soon. However, other industries — most notably the auto industry — is still struggling with material shortages.
The Delta variant may also cause some problems for the recovering labor market. Already, there are signs that the Delta variant has caused some problems for businesses in various industries, though travel-related businesses seem to be the only ones really hit thus far. As more COVID-19 cases surge across the United States — and elsewhere around the world — business activity may slow as a result of concerned or wary consumers.
Consumer sentiment has also decreased, possibly because of the Delta variant. Some companies have already come out and announced that their quarter three profits may slow as a result of the surge in COVID-19 cases around the nation.
So, even though the labor market is showing positive signs and pointing towards recovery, economists are keeping an eye on some of the problems that may slow this recovery down. For a healthy labor market, weekly jobless claims should be somewhere in the 200,000 – 250,000 range. Currently, the United States is at 348,000, slightly higher than what economists would like for a growing economy.
The economy has speedily grown this year as many COVID-19 regulations and laws went away. However, now that some have come back, economists haven’t yet forecasted whether this will affect the economy greatly or not.