This is partly due to the sharp increase in the number of unemployed in California.
The number of initial applications for unemployment benefits in the United States unexpectedly increased last week, against the background of a sharp increase in the number of unemployed in California. Still, in general, the labor market continues to recover confidently.
The number of initial applications for benefits last week increased by 16,000 to a seasonally adjusted 351,000, the Labor Ministry said on Thursday. Economists polled by Reuters had predicted 320,000 applications.
In California, the number of requests increased by 24,221 without adjusting for the seasonal factor. This surge compensated for a sharp decrease in the number of applications in Louisiana, which was affected by Hurricane Ida at the end of August.
The four-week moving average number of applications, which is considered a more accurate indicator of labor market trends because it smooths out weekly volatility, fell by 750 to 335,750 last week.
Meanwhile, the Federal Reserve on Wednesday gave an optimistic forecast for the economy, paving the way for a reduction in monthly bond purchases “soon” and making it clear that interest rates may be raised sooner than expected.
In August, job growth slowed, reaching the lowest level in seven months amid a decline in hiring in the leisure and hospitality sector due to a sharp increase in the incidence of coronavirus caused by the spread of the Delta strain.
Factors related to the pandemic are causing a labor shortage, which is holding back the expansion of hiring. Fed Chairman Jerome Powell told reporters that he expects “faster employment growth” as these factors, including the lack of affordable child care and the fear of contracting the virus, will weaken over time.
At the end of July, a record number of vacancies was registered – 10.9 million. The Fed had forecast the unemployment rate at 4.8 percent this year, while back in June, the forecast was at 4.5 percent. The unemployment rate in August was 5.2 percent.