Weekly Jobless Claims Unexpectedly Rise, Blow Past Estimates
Weekly jobless claims climbed higher than expected last week with 419,000 initial filings for unemployment, coming in well above the expected 350,000 Dow Jones estimate, the Labor Department reports.
The number also represents an increase of 51,000 from the previous week’s levels. AP News claims that economists have characterized this increase as most likely a “blip” caused by some one-off factors and inevitable bumpiness on the road to recovery. Applications for unemployment insurance jumped last week in Michigan, where auto plants have temporarily shut down production due to ongoing supply shortages that have been exacerbated by the pandemic.
Supply chain disruptions caused by computer chip shortages, and now truck shortages as well, have created an incredibly tight supply chain for the automotive industry.
Construction contractors, home cleaners and other service-based companies are struggling to find new work vehicles as demand picks back up, the Wall Street Journal reports. A shortage of computer chips — used in almost every kind of device you can think of from engines to a cell phones — have been disrupted for almost half the year. Dealer inventories have shrunk, and consumers are even having difficulty finding used cars for personal and business use, as dealers have been wiped.
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As mentioned, the largest increase in claims came from Michigan, a state that has historically housed much of the country’s auto production. Kentucky, another state with large auto plants, has also reported a large rise in new jobless claims, the WSJ adds.
This comes on the heels of over half of the nation’s states canceling federal unemployment insurance early, with governors claiming there are more jobs than there are people to fill them. The conflict has been at the center of the labor discussion in recent months, as unemployment has remained relatively elevated, but business owners throughout the country complain of begging for employees to fill an abundance of positions.
One reason for the increase could be a seasonal adjustment. Auto plants and other factories often tend to shut down in the early part of July, and this could have contributed to unemployment insurance upticks for last week.
The next few weeks of data will be revealing though, as the tension bulbs in a historically tight labor market that seems to be overflowing with opportunities that employees are hesitant to grasp for.
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Last updated: July 23, 2021