US initial jobless claims hit 16-month low, but supply shortages hamper manufacturing

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US initial jobless claims hit 16-month low, but supply shortages hamper manufacturing

On Thursday, the US Labour Department data had revealed that the number of Americans filing for first-time state unemployment benefits had dipped to a 16-month low last week as a raft of Republican-controlled US states had scrapped the Biden Administration’s $300-per-week in additional jobless benefits and labour market appears to be gathering steam, however, US manufacturing activity that accounts for more than a tenth of entire US economic activity fell amid a baleful bottleneck in supply chains alongside a sweeping shortage of raw materials.

In point of fact, other Government data released earlier in the day had unfurled that the US factory output had faltered last month with motor vehicles bearing the heaviest brunt due to a sheer lack of semiconductor chips, while a widening of gap between growing consumers’ demands stemming from a robust reopening of US economy and a supply shortage, had continued to keep prices at a higher level, stoking frets of further rise in inflation indicators over coming month.

However, speaking in a Congressional hearing, the US Fed Chair Jerome Powell said yesterday that the supply shortage and a higher inflation would be ‘transitory.’

US labour market recovery speeds up

According to US Labour Department data, the number of Americans applying for initial benefits tumbled 26,000 to a seasonally adjusted 360,000 over the week that ended on July 10, the lowest reading since mid-March 2020, while continuing claims dropped by 126,000 to 3.241 million during the week that ended on July 3, as roughly 9.5 million Americans remained officially unemployed.

In tandem, US factory output fell 0.1 per cent in June after rising 0.9 per cent in May. Meanwhile, submissively supporting the US Fed’s view on inflation outlook, a Wells Fargo economist Tim Quinlan said following the data, “The problem continues to be sourcing the input components and the skilled workers that remain in short supply, but there is evidence that the logjam is beginning to break up”.