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The numbers: Applications for U.S. unemployment benefits rose slightly last week to 207,000 and clung near a 52-year low, suggesting that soaring coronavirus cases tied to omicron haven’t caused mass layoffs.
Initial jobless claims increased from a revised 200,000 in the prior week, the Labor Department said Thursday.
Economists polled by The Wall Street Journal had forecast initial jobless claims to total a seasonally adjusted 195,000 in the seven days ended Jan. 1.
There’s no doubt the number of people applying for jobless benefits are extremely low. The reported number of layoffs are the lowest on record — excluding the first few months of the pandemic — as businesses cope with the worst labor shortage in decades.
See: Workers quit their jobs at record pace in November
Yet the government’s method of adjusting jobless claims for seasonal swings is often skewed during and after the holiday season at the end of the year. The problem has been made worse by the pandemic.
The raw or actual number of jobless claims have averaged closer to 260,000 a week since November. Last week, they jumped to 315,469, likely reflecting people losing temporary holiday jobs and a smattering of omicron-related layoffs.
The number of people already collecting jobless benefits, meanwhile, increased by 36,000 to 1.75 million, the Labor Department said Thursday. These so-called continuing claims are now back to pre-crisis levels.
See: Sticky inflation, bigger paychecks, fading stimulus – how the U.S. economy is shaping up for 2022
Big picture: Businesses are trying to fill millions of job openings and workers have the most bargaining power in years. A record number of people are quitting, usually to leave one job for a better-paying one.
What’s still unclear is whether the record surge in omicron coronavirus cases spurs a new wave of layoffs or forces companies to delay hiring plans. Economists predict any damage to the labor market is likely to be short-lived if the latest viral outbreak subsides quickly.
See: High U.S. inflation hearkens back to the 1980s
Key details: New jobless claims rose the most in New York, Pennsylvania, Connecticut, Michigan and Washington.
All of those states have had big omicron outbreaks and several have imposed new restrictions on individuals and businesses. Some of the new jobless claims filing are almost certainly tied to omicron.
New filings fell the most in Missouri. Most other states saw little change.
It’s worth keeping in mind that the holiday season often results in large swings in jobless claims. Companies add lots of temporary workers in the last few months of the year and then let them go after Christmas.
What they are saying? “The labor market remains extremely tight, and firms won’t let staff go unless they have no other choice,” said chief economist Ian Shepherdson of Pantheon Macroeconomics. “It’s possible that an extended omicron wave would change that, but the initial impact likely is to make firms even more keen to keep people, as absenteeism due to Covid rockets.”
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were set to open higher in Thursday trades.
