By Lucia Mutikani

WASHINGTON (Reuters] – Last week’s decline in Americans filing claims for unemployment benefits was close to a 19 month low, further evidence of the fact that a shortage rather than a slowing of labor market growth is behind slower job growth.

For the week of Oct. 9, initial claims for unemployment benefits fell 36,000 to an adjusted seasonally 293,000. It was the lowest level recorded since mid March 2020. According to Reuters, economists had predicted 316,000 claims in the most recent week.

The second consecutive weekly drop in claims has resulted in claims now being at the top-end of the 250,000-350,000 range, which is consistent with a healthy labor marketplace. In April 2020, claims fell to 6.149million from an all-time high.

Last Friday, the government announced that September saw a decrease in nonfarm payrolls of 194,000 jobs. This is the lowest increase in 9 months. According to government data, Tuesday’s report showed that there was 10.4 million jobs available at the end August. This is mainly due to a shortage of workers and a skills mismatch.

The COVID-19 pandemic has also caused labor shortages in other countries. There is some hope for more Americans to join the workforce, with coronavirus strains driven by the Delta variant decreasing and schools reopening for learning in person.

In the coming months, the labor shortage could ease due to the end of federal-funded benefits that expired in September. The labor pool may remain small despite increased self-employment and huge savings, as well as earlier retirements due to record stock markets and high house prices.

A shortage of labor is hampering the supply chain as fewer workers are available to create raw materials and products as well to transport them to markets. This in turn causes inflation.

According to another Thursday report, Labor Department’s producer price index for final demands increased 0.5% by September. It had risen 0.7% in August. After a 8.3% increase in August, the PPI saw an 8.6% acceleration over the 12-month period to September. It was the highest year-on–year growth since November 2010.

Reuters polled economists to forecast that the PPI will rise by 0.6% monthly and 8.7% per year.

This report came on the heels Wednesday’s news of a strong increase in consumer prices for September. It was driven by large gains in food, rents and a variety of other goods.

Minutes from the Federal Reserve’s September 21-22 policy meeting were released on Wednesday. Some officials of the central bank expressed concerns that rising inflation rates might feed into long-term inflation expectations of businesses and households.