1. Unemployment Benefit Claims in the United States are on the Decline
2. The Jobs Report Being out on Friday is Likely to be Strong
3. In August, Inflation Rose Above the 19 Percent Interest Rate

Unemployment Benefit Claims in the United States are on the Decline

According to the Labor Department, the number of people filing for unemployment benefits in the United States fell slightly last week but remained in the same narrow range as it has been for the past two months. The government reported that 385,000 jobless people applied for unemployment benefits, down 14,000 from the previous week’s revised total.

Since late May, the weekly number of new claims, a proxy for layoffs, has varied from 368,000 to 424,000, still significantly higher than the 218,000 records in 2019, when the coronavirus pandemic blasted through the United States last year, disrupting the world’s largest economy.

The release of job growth data for July will provide a more comprehensive picture of the US employment picture on Friday. In June, the United States added 850,000 jobs, bringing the unemployment rate to 5.9%.

The United States announced a week ago that its economy grew by 6.5 percent in April-June, a slightly quicker annualized rate than in the first three months of the year, as the country slowly recovers from the economic devastation caused by the coronavirus.

More than 60% of adults in the United States are now fully vaccinated against the coronavirus, helping the economy recover.

The Jobs Report Being out on Friday is Likely to be Strong

The August employment data is expected to indicate another robust month for hiring, but it may also provide insight into how the Covid-19 delta variation has affected the economy. 

The jobs data, which will be released at 8:30 a.m. ET on Friday is likely to provide crucial information to the Federal Reserve as it considers whether to begin reducing its bond purchases.

Economists forecast 720,000 new jobs in August. A positive jobs report, on the other hand, could impact stock prices on Friday morning, according to Ferridge. “That’s a tougher one for the market to shrug off. … We are in the weird world where bad news is good news in terms of risk appetite. Anything that says we might see a more hawkish central bank, that’s bad news.”

However, the Fed, like economists, will be looking for signs that Covid has had an influence on hiring and activity. The delta variant has been a wild card for the economy.

In August, Inflation Rose Above the 19 Percent Interest Rate

While consumer inflation was announced as 19.25 percent in August, above the expectations, real interest rates fell into the negative region according to the realized inflation.  On a monthly basis, the increase was 1.12 percent in August. 

Core inflation, on the other hand, declined compared to the previous month. Accordingly, annual core inflation, which was 17.22 percent in July, was reduced to 16.76 percent.

Food inflation at a 28-month high. The rapid rise in food inflation in consumer prices drew attention. In August, food prices increased by 29 percent compared to the previous year. Thus, annual food inflation saw the highest increase since April 2019. The food and non-alcoholic beverages group was followed by household goods with 22.91 percent and transportation with 21.76 percent. The lowest annual increase was 1.79 percent in the alcoholic beverages and tobacco group. The other main groups in which the increase was lower compared to the same month of the previous year were communication with 4.79 percent, clothing and shoes with 7.47 percent, and education with 10.75 percent, respectively.

Producer prices increased by 2.77 percent compared to the previous month. The gap between the annual increase recorded in producer-consumer price indices also broke a new record in August with 26.3 points.