Tag Archives: Inflation

Mexico inflation quickens faster than expected to 20-year high

MEXICO CITY (Reuters) – Mexican annual inflation accelerated faster than expected in November to its highest level in over two decades, official data showed on Thursday, reinforcing bets the central bank will raise its benchmark interest rate again when it meets next week.

Figures from national statistics agency INEGI showed inflation in Latin America’s No. 2 economy jumped to 7.37% last month from 6.24% in October. That compared with the consensus forecast of a Reuters poll for 7.22%.

The November figure took inflation to its highest level since January 2001.

The core rate of inflation, which strips out some volatile items, reached 5.67%.

The Bank of Mexico (Banxico) last month raised its benchmark interest rate by 25 basis points to 5%, the fourth consecutive hike. It also revised up its expectations for Mexican inflation at the close of this year.

Banxico’s final monetary policy meeting for the year is due on Dec. 16. The bank targets inflation of 3%, with a one percentage point tolerance range above and below that.

Earlier this week, Irene Espinosa, a member of the central bank’s board, said Banxico’s monetary policy stance continues to be accommodative and that it should respond forcefully to anchor inflation expectations.

Month-on-month, Mexican consumer prices increased by 1.14% in November, the INEGI data showed. Meanwhile, the core index of prices rose by 0.37% from October.

(Reporting by Dave Graham; Editing by Andrew Cawthorne)

Brazil in recession as drought, inflation and interest rates bite

By Marcela Ayres and Camila Moreira

BRASILIA (Reuters) -Brazil’s economy contracted slightly in the three months to September, government data showed on Thursday, as surging inflation, steep interest rate hikes and a severe drought triggered a recession in Latin America’s largest economy.

The 0.1% decline in Brazil’s gross domestic product (GDP) in the third quarter, reported by official statistics agency IBGE, was below a median forecast for zero growth in a Reuters poll.

Brazil’s economic rebound from the worst of the COVID-19 pandemic has sputtered as inflation surged into double digits, forcing the central bank to raise borrowing costs aggressively despite the downturn.

Economists have said that the stubbornly high levels of inflation in Brazil have steadily eroded consumers’ purchasing power, proving a drag on the economy.

Some analysts said Thursday’s weak data may discourage the bank’s monetary policy committee, called Copom, from an even larger interest rate increase at its December meeting.

“Against this backdrop, we no longer see Copom upping the pace of monetary tightening next week,” William Jackson, chief emerging markets economist at Capital Economics, told clients in a note, forecasting another rate increase of 150 basis points.

Big rate hikes from the central bank, whose autonomy was written into Brazil’s constitution this year, are one more headwind for a weak economy, which is weighing on President Jair Bolsonaro’s popularity as he prepares to seek reelection in 2022.

Revised data showed a 0.4% drop in the second quarter, worse than the 0.1% decline reported previously. Two straight quarters of contraction meet the definition of a recession.

Unusually dry weather this year has also hurt key Brazilian crops such as corn and coffee. Vanishing reserves at hydropower dams drove up electricity costs, adding to price shocks.

Agricultural production fell 8.0% in the third quarter, while industrial output was flat and services advanced 1.1%.

Brazil’s auto industry has struggled to ramp up production amid a shortage of components such as microchips in global supply chains. Shortages have also hurt manufacturing in Mexico, whose economy contracted more than expected in the quarter.

WORSE TO COME

Some economists are warning of a deeper downturn next year.

The market outlook for 2022 economic growth has fallen from 2.3% in June to less than 0.6% in the latest central bank poll of economists, released on Monday.

Brazil’s Economy Ministry dismissed that consensus in a statement on Thursday, reaffirming its forecast of economic growth above 2% next year and pointing to recent job creation data as evidence of a resilient recovery.

Brazil’s unemployment rate fell to 12.6% in the third quarter from 14.2% in the prior quarter, data showed this week, hitting the lowest point since the beginning of the pandemic.

“The government has an obvious bias to overestimate (growth) as long as possible. But there comes a point when you can’t,” said José Francisco Gonçalves, chief economist at Banco Fator.

Compared to the third quarter of 2020, Brazil’s economy grew 4.0%, IBGE data showed, below a median forecast of 4.2% growth.

(Reporting by Marcela Ayres in Brasilia and Camila Moreira in Sao Paulo; Writing by Brad Haynes; Editing by Bernadette Baum, Daniel Flynn and Richard Chang)

 

U.S. economy gaining steam as manufacturing forges ahead; shortages still a constraint

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. manufacturing activity picked up in November amid strong demand for goods, keeping inflation high as factories continued to struggle with pandemic-related shortages of raw materials.

Signs that the economy was gathering momentum halfway through the fourth quarter were underscored by other data on Wednesday showing private employers maintained a strong pace of hiring last month. But there are fears that the Omicron variant of COVID-19 could hurt demand for services as well as keep the unemployed at home, and hold back job growth and the economy.

“Manufacturing should continue to contribute positively to GDP growth over the next year as businesses replenish inventories and supply-chain issues improve,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “There are risks, including the potential for businesses overbooking orders now and the Omicron variant magnifying price and supply chain issues.”

The Institute for Supply Management (ISM) said its index of national factory activity increased to a reading of 61.1 last month from 60.8 in October.

A reading above 50 indicates expansion in manufacturing, which accounts for 12% of the U.S. economy. Economists polled by Reuters had forecast the index rising to 61.0.

“The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment, with some indications of slight labor and supplier delivery improvement,” said Timothy Fiore, ISM chair of the manufacturing business survey committee.

Global economies’ simultaneous recovery from the COVID-19 pandemic, fueled by trillions of dollars in relief money from governments, has strained supply chains, leaving factories waiting longer to receive raw materials.

The Federal Reserve’s Beige Book on Wednesday described economic activity as growing at “a modest to moderate pace” during October and early November, but noted that “growth was constrained by supply chain disruptions and labor shortages.”

All of the six largest manufacturing industries in the ISM survey, including computer and electronic products as well as transportation equipment, reported moderate to strong growth.

Makers of computer and electronic products said “international component shortages continue to cause delays in completing customer orders.” Transport equipment manufacturers reported “large volume drops due to chip shortage.” Furniture producers said “business is strong but meeting customer demand is difficult due to a shortage of raw materials and labor.”

But there are some glimmers of hope. Prices for steel plate and hot-rolled coil appear to be nearing a plateau, according to manufacturers of fabricated metal products. Supply of plastic resins is improving, accounts from electrical equipment, appliances and components, as well as plastics and rubber products manufacturers suggested.

The ISM survey’s measure of supplier deliveries slipped to 72.2 from 75.6 in October. A reading above 50% indicates slower deliveries.

The long delivery times kept inflation at the factory gate bubbling. The survey’s measure of prices paid by manufacturers fell to a still-high 82.4 from 85.7 in October.

Factories are easily passing the increased production costs to consumers and there are no signs yet of resistance.

Fed Chair Jerome Powell told lawmakers on Tuesday that “the risk of higher inflation has increased,” adding that the U.S. central bank should consider accelerating the pace of winding down its large-scale bond purchases at its next policy meeting in two weeks.

The Fed’s preferred inflation measure surged by the most in nearly 31 years on an annual basis in October.

Stocks on Wall Street rebounded after Tuesday’s sell-off. The dollar was steady against a basket of currencies. Prices for longer-dated U.S. Treasury prices rose.

STRONG ORDERS

The ISM survey’s forward-looking new orders sub-index climbed to 61.5 last month from 59.8 in October. Customer inventories remained depressed.

With demand robust, factories hired more workers. A measure of manufacturing employment rose to a seven-month high.

Strengthening labor market conditions were reinforced by the ADP National employment report on Wednesday showing private payrolls increased by 534,000 jobs in November after rising 570,000 in October. That was broadly in line with expectations.

This, combined with consumers’ robust perceptions of the labor market last month suggest job growth accelerated further in November. First-time applications for unemployment benefits declined between mid-October and mid-November.

But a shortage of workers caused by the pandemic is hindering faster job growth. There were 10.4 million job openings at the end of September.

Workers have remained home even as companies have been boosting wages, school reopened for in-person learning and generous federal government-funded benefits ended.

“Overall, the risk remains that renewed health concerns will keep workers, especially those with caregiving responsibilities, from returning to the labor force, preventing a return to pre-pandemic strength,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York.

According to a Reuters survey of economists nonfarm payrolls probably increased by 550,000 jobs in November. The economy created 531,000 jobs in October.

The Labor Department is scheduled to publish its closely watched employment report for November on Friday.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

OECD says inflation is main risk to economic outlook

PARIS (Reuters) – The main risk to an otherwise upbeat global economic outlook is that the current inflation spike proves longer and rises further than currently expected, the OECD said on Wednesday.

Global growth is set to hit 5.6% this year before moderating to 4.5% in 2022 and 3.2% in 2023, the Organization for Economic Cooperation and Development said in its latest economic outlook.

That was little changed from a previous forecast of 5.7% for 2021, while the forecast for 2022 was unchanged. The OECD did not produce estimates for 2023 until now.

With the global economy rebounding strongly, companies are struggling to meet a post-pandemic snap-back in customer demand, causing inflation to shoot up worldwide as bottlenecks have emerged in global supply chains.

Like most policymakers, the OECD said that the spike was expected to be transitory and fade as demand and production returned to normal.

“The main risk, however, is that inflation continues to surprise on the upside, forcing the major central banks to tighten monetary policy earlier and to a greater extent than projected,” the OECD said.

Provided that that risk did not materialize, inflation in the OECD as a whole was likely close to peaking at nearly 5% and would gradually pull back to about 3% by 2023, the Paris-based organization said.

Against that backdrop, the best thing central banks can do for now is wait for supply tensions to ease and signal they will act if necessary, the OECD said.

Federal Reserve Chair Jerome Powell said on Tuesday that the U.S. central bank should consider winding down of its large-scale bond purchases faster amid a strong economy and expectations that a surge in inflation will persist into the middle of next year.

In the United States, the OECD forecast the world’s biggest economy would grow 5.6% this year, 3.7% in 2022 and 2.4% in 2023, down from previous projections of 6.0% in 2021 and 3.9% in 2022.

The outlook for China was also less optimistic, with growth forecast at 8.1% in 2021 and 5.1% in both 2022 and 2023 whereas previously the OECD had expected 8.5% in 2021 and 5.8% in 2022.

However, the outlook was slightly more upbeat for the euro zone than previously expected with growth expected at 5.2% in 2021, 4.3% in 2022 and 2.5% in 2023 compared with previous forecasts of 5.3% in 2021 and 4.6% 2022.

(Reporting by Leigh Thomas, Editing by William Maclean)

Inflation worries, pandemic curb U.S. consumer confidence; house prices cooling

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. consumer confidence dropped to a nine-month low in November amid worries about the rising cost of living and pandemic fatigue, but that probably does not change expectations for stronger economic growth this quarter.

The survey from the Conference Board on Tuesday showed consumers less enthusiastic about buying a home and big-ticket items such as motor vehicles and major household appliances over the next six months. But consumers held strong views of the labor market, with the gap between those saying jobs are plentiful versus hard to get widening to a record high.

“This isn’t a cause for concern as the relationship between spending and sentiment is loose, particularly in the short-run,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “The good news is that consumers’ assessment of the labor market improved in November, pointing toward further acceleration in job growth.”

The Conference Board said its consumer confidence index fell to a reading of 109.5 this month, the lowest reading since February, from 111.6 in October. The survey was conducted before the discovery of Omicron, a new COVID-19 variant, that was announced last week by South African scientists.

Economists polled by Reuters had forecast the index falling to 111.0. The measure, which places more emphasis on the labor market, has dropped from a peak of 128.9 in June. The fall was less than that of the University of Michigan’s survey of consumer sentiment, which dropped to a decade low this month.

Data this month have suggested that the economy was accelerating in the fourth quarter, with consumer spending surging in October. But the outlook for next year has been clouded by the Omicron variant, which has since been detected in several countries outside the southern African region.

Not much is known about how contagious or vaccine resistant the Omicron variant is. The Conference Board’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, jumped to a reading of 46.9 this month, the highest on record, from 43.8 in October.

This measure closely correlates to the unemployment rate in the Labor Department’s closely watched employment report.

Combined with declining new claims for unemployment benefits, it raises hopes that job growth accelerated further this month, though a shortage of workers remains a challenge. There were 10.4 million job openings at the end of September.

INFLATION FEARS MOUNT

Consumers’ inflation expectations over the next 12 months surged to 7.6% in November from 7.1% last month. Federal Reserve Chair Jerome Powell told lawmakers on Tuesday that the higher prices were generally related to the pandemic, and warned that the risk of higher inflation had increased.

Stocks on Wall Street were trading lower on Powell’s inflation comments. The dollar rose against a basket of currencies. U.S. Treasury prices were mixed.

Rising inflation is starting to influence consumers’ spending decisions, the Conference Board survey suggested.

Buying intentions for motor vehicles fell as did plans to purchase household appliances, television sets and refrigerators over the next six months. But intentions to buy washing machines and clothes dryers rose.

The survey also showed consumers less inclined to buy a house over the next six months. Slowing demand could help to further cool house price inflation.

A second report on Tuesday showed the S&P CoreLogic Case-Shiller’s 20 metropolitan area home price index rose 19.1% on a year-on-year basis in September after advancing 19.6 %in August.

Signs that house price growth was moderating were evident in a third report from the Federal Housing Finance Agency that showed house prices rose 17.7% in the 12 months through September after powering ahead 18.5% in August.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

Canadian shippers find few easy alternatives for grain, oil cut off by flood

By Rod Nickel

WINNIPEG, Manitoba (Reuters) – Canadian exporters of commodities from grain to fertilizer and oil scrambled on Wednesday to divert shipments away from Port of Vancouver, which floods have isolated, but they found few easy alternatives.

The disaster, which has killed at least one person, has caused the latest blockage in the congested global supply chain, driving up inflation fears ahead of the holiday shopping season.

A month’s worth of rain in two days caused floods and mudslides in British Columbia that wrecked highways and two critical east-west rail lines owned by Canadian National Railway Co and Canadian Pacific Railway leading to Canada’s busiest port.

The Trans Mountain oil pipeline and part of an Enbridge Inc gas line have closed as precautions.

“That western corridor is our lifeblood,” said John Brooks, CP’s chief marketing officer, at an investor conference on Tuesday. “Just about all commodities to some extent flow through that.”

Vancouver’s port moves C$550 million ($437 million) worth of cargo a day, ranging from automobiles and consumer goods to commodities.

The alternatives include diverting commodities to British Columbia’s northern port of Prince Rupert, to the U.S. Pacific Northwest or across the continent to eastern Canada.

The clock is ticking. Port of Vancouver said it expects vessels to anchor longer while they await delayed cargo, a situation that usually results in shippers paying demurrage for the extra wait.

Buyers can also charge penalties for shipments that arrive late, raising the urgency to find alternatives.

“Everyone is looking at it,” one Canadian grain trader said.

Even if the railways can carry out repairs within a few days and restore service – they have not provided estimated timelines – delays will stretch for as much as one month given the backlog of shipments to work through, said a second grain industry source.

The Prince Rupert grain terminal, owned by Richardson International, Viterra and Cargill Inc, is already busy with exports, limiting its capacity to handle more volumes, said Wade Sobkowich, executive director of the Western Grain Elevator Association.

Canola futures for January delivery fell 1.5% as traders factored in transportation problems from the floods.

Teck Resources, a copper and coal miner, said in a statement that it was diverting trains from Vancouver to a Prince Rupert terminal.

Canpotex Ltd, the potash export company owned by Nutrien Ltd and Mosaic Co, will ship more of the crop nutrient through its smaller terminals in Portland, Oregon. and Saint John, New Brunswick, spokesperson Natashia Stinka said.

Trans Mountain’s closure means some 300,000 barrels of oil and refined products each day will start filling storage tanks, or find another conduit.

The main alternatives are shipping oil east on Enbridge’s Mainline or south by train to the United States, said John Zahary, CEO of Altex Energy, which owns rail terminals in Alberta and Saskatchewan.

“(It) does seem like supply chains are so tight these days that when something happens, panic and scrambling becomes the plan,” Zahary said.

(Reporting by Rod Nickel in Winnipeg; Editing by Lisa Shumaker)

As Port of Los Angeles import backups ease, empty containers pile up

By Lisa Baertlein

LOS ANGELES (Reuters) – The number of container ships waiting to enter the busiest U.S. seaport complex hit a new record of 84 on Tuesday, as growing piles of empty containers crowd docks at the Southern California facility that has been racing to remove lingering imports.

The conundrum illustrates the challenge faced by a U.S. government task force charged with tackling supply chain snarls that are contributing to product shortages and inflation.

U.S. ports have been inundated with cargo since the pandemic shifted spending away from restricted entertainment like travel and dining out to physical goods. COVID-19 also reduced labor needed to keep goods flowing smoothly. Aging truckers retired early, while infection control measures have limited dock and warehouse staffing.

There are now roughly 65,000 empty containers on the Port of Los Angeles docks, up about 18% from just a couple of weeks ago, said the port’s executive director, Gene Seroka. He added that “sweeper” ships are inbound to shuttle some of those boxes back to factories in Asia.

Meanwhile, the number of import containers at the Los Angeles port fell 25% to 71,000 since Oct. 24, Seroka said.

Railroads and truckers have made progress moving import containers off docks at the adjacent ports of Los Angeles and Long Beach – prompting executives from to delay imposing a new fee on overstaying imports by one week to Nov. 22.

The new fee would hit imports destined for truck removal after nine days or more on docks, and would start after six days or more for rail-bound cargo. Ports would charge ocean carriers escalating fees for overstaying container – with a $100 charge for the first day, $200 for the second, and so on.

Prior to the pandemic, containers intended for local truck deliveries spent fewer than four days on average on docks, while containers earmarked for trains stayed less than two days, the ports said.

Ocean carriers like AP Moller Maersk said they plan to pass any new fees on to importers – meaning that consumers could ultimately shoulder the extra cost.

(Reporting by Lisa Baertlein; Editing by Sandra Maler)

Fed officials say high inflation weighing on consumers and needs to be controlled

By Jonnelle Marte

(Reuters) – Federal Reserve officials said on Tuesday they are vigilant of the ways that higher inflation can affect U.S. households and dampen consumer sentiment and want to get it under control.

While wages are rising for some workers, consumer sentiment is down to a “level that you might associate with a recession,” said Richmond Fed President Thomas Barkin, citing the consumer sentiment survey from the University of Michigan.

“I think that’s very much because of the impact that prices have on people,” including those who spend a significant part of their pay on food and gas, Barkin said during a virtual panel organized by the Fed.

Atlanta Fed President Raphael Bostic said the central bank aims for low inflation because it doesn’t want households to stress about rising prices. “That’s one of the reasons why, you know, I think you’ve heard from all of us concerns about the higher levels of inflation that we’ve seen recently and the need to get that back under control,” Bostic said.

The Fed this month began to reduce the pace of its monthly asset purchases, the first step in scaling back the support offered to the U.S. economy during the pandemic. Fed officials would like to wind down the bond purchases before they raise interest rates.

Some policymakers say the Fed should be prepared to act in case inflation lasts longer than expected. St. Louis Fed President James Bullard, speaking earlier in the day, said the Fed should “tack in a more hawkish direction” over its next couple of meetings to be prepared in case inflation does not ease.

“If inflation happens to go away we are in great shape for that. If inflation doesn’t go away as quickly as many are currently anticipating it is going to be up to the (Federal Open Market Committee) to keep inflation under control,” Bullard said on Bloomberg Television.

(Reporting by Jonnelle Marte and Howard Schneider; Editing by Chizu Nomiyama)

‘Sheriff Joe’ Biden to name coordinator to oversee $1 trillion in infrastructure bill

By Andrea Shalal

WASHINGTON (Reuters) -U.S. President Joe Biden said he would appoint a coordinator next week to oversee spending under a $1 trillion infrastructure bill, a role similar to one he held under former President Barack Obama that earned him the nickname “Sheriff Joe.”

Biden told reporters he had called his Cabinet members together to hammer home the need to ensure that the funding, and $1.75 trillion in a separate social and climate measure still working its way through Congress, were used wisely.

“One of our biggest responsibilities is to make sure the money is used efficiently and effectively,” he said at the start of a meeting. “If we do it right, we know what it’ll mean … we’ll create millions of new jobs and grow the economy.”

Biden said he would sign the infrastructure measure on Monday at a bipartisan ceremony, potentially outside, and expressed confidence that it would improve U.S. competitiveness versus China and other countries, while easing inflation that has spiked in recent months.

White House spokesperson Jen Psaki said the person who would oversee implementation of the newly passed U.S. infrastructure bill would come from outside the administration, but gave no further details.

Biden often talks about his role overseeing implementation of a $787 billion stimulus act while serving as vice president under Obama, a measure that he said resulted in less than .2% waste and fraud.

“Friends started calling me Sheriff Joe … because I made it a point every day to stay on top of how exactly the money was spent, what projects were being built, and what projects were not being built, and how it was functioning,” he said.

Biden earlier this year named former long-term economic adviser Gene Sperling to oversee implementation of $1.9 trillion COVID-19 relief package, and named Jeff Zients, a former Obama official, to head his administration’s overall COVID-19 response.

(Reporting by Andrea ShalalEditing by Chris Reese and Jonathan Oatis)

Soaring gasoline, food prices boost U.S. inflation; labor market tightening

By Lucia Mutikani

WASHINGTON (Reuters) -U.S. consumer prices accelerated in October as Americans paid more for gasoline and food, leading to the biggest annual gain in 31 years, suggesting inflation could stay uncomfortably high well into 2022 amid snarled global supply chains.

Inflation pressures are also brewing in the labor market, where an acute shortage of workers is driving wages higher. The number of Americans filing claims for unemployment benefits fell to a 20-month low last week, other data showed on Wednesday.

High inflation is eroding the wage gains, adding to political risk for President Joe Biden, whose approval rating has been falling as Americans grow more anxious about the economy. The White House and the Federal Reserve, which views high inflation as transitory, have maintained that prices will fall once supply bottlenecks start easing.

“There is increasing evidence that inflationary pressures are broadening out, underlining that inflation will remain elevated for much longer than Fed officials expect,” said Andrew Hunter, a senior economist at Capital Economics.

The consumer price index jumped 0.9% last month after climbing 0.4% in September, the Labor Department said on Wednesday. The largest gain in four months boosted the annual increase in the CPI to 6.2%. That was the biggest year-on-year rise since November 1990 and followed a 5.4% increase in September.

The broad-based increase in prices last month was led by gasoline prices, which surged 6.1% after rising 1.2% in September. Food prices advanced 0.9%, with meat, eggs, fish, vegetables, cereals and bakery products becoming more expensive. But prices for alcoholic beverages declined. Rents increased a solid 0.4% and prices for both new and used motor vehicles rose.

Excluding the volatile food and energy components, the CPI gained 0.6% after climbing 0.2% in September. The so-called core CPI jumped 4.6% on a year-on-year basis, the largest increase since August 1991, after being steady at 4.0% for two straight months. Economists polled by Reuters had forecast the overall CPI shooting up 0.6% and the core CPI rising 0.4%.

U.S. stocks opened lower. The dollar rose against a basket of currencies. U.S. Treasury yields rose.

WORKER SHORTAGES

Inflation is heating up again as the economic drag from the summer wave of COVID-19 infections, driven by the Delta variant, fades and supply bottlenecks persist. Trillions of dollars in pandemic relief from governments across the globe fueled demand for goods, leaving supply chains overstretched.

The nearly two-year long pandemic has upended labor markets, causing a global shortage of workers needed to produce raw materials and move goods from factories to consumers. The government reported on Tuesday that producer prices increased strongly in October, reversing a slowing trend in the monthly PPI that had become entrenched since spring.

Though the Fed last week restated its belief that current high inflation is “expected to be transitory,” most economists are skeptical, also noting that wages are rising strongly as companies scramble for workers.

The U.S. central bank this month started reducing the amount of money it is injecting into the economy through monthly bond purchases. The Fed’s preferred inflation measure for its flexible 2% target increased 3.6% year-on-year in September.

With labor scarce, companies are holding on to their workers. In another report on Wednesday, the Labor Department said initial claims for state unemployment benefits fell 4,000 to a seasonally adjusted 267,000 for the week ended Nov. 6.

That was the lowest level since the middle of March in 2020, when the economy almost ground to a halt under the onslaught of mandatory business closures aimed at slowing the first wave of COVID-19 infections. Claims, which have now declined for six straight weeks, are within striking distance of their pre-pandemic level.

The report was published a day early because the federal government is closed on Thursday for the Veterans Day holiday.

The government reported last Friday that the economy added 531,000 jobs in October, with annual wage growth the largest in eight months. The labor force is down 3 million from its pre-pandemic level, making it harder to fill the 10.4 million job openings as of the of August.

“Businesses facing labor shortages are likely retaining rather than laying off workers,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York. “Even so, for the labor market, supply remains a constraint that is a headwind for the recovery for now.”

(Reporting by Lucia Mutikani; Editing by Dan Burns and Andrea Ricci)