US jobless claims trend down as Omicron disruptions begin to ease
First-time unemployment filings ticked lower for the first time in four weeks after notching a three-month high in the previous reading, suggesting some of the Omicron-related disruptions that have recently weighed on the labor market's recovery may be easing.
The Labor Department released its weekly jobless claims report at 8:30 a.m. ET on Thursday. Here were the main metrics from the print, compared to consensus estimates compiled by Bloomberg:
Initial jobless claims, week ended Jan. 22: 260,000 vs. 265,000 expected and upwardly revised to 290,000 during prior week
Continuing claims, week ended Jan. 15: 1.675 million vs. 1.655 million expected and downwardly revised to 1.624 million during prior week
The agency’s latest print fell to a better-than-expected 260,000 from the previous week's figure, which reflected the third straight increase for initial jobless claims and another dent in the months-long downward trajectory of filings. Claims from the prior read came in near the 300,000 level at 286,000 in an unexpected jump from the revised tally of 231,000.
A rush in U.S. workers applying for unemployment insurance was attributed to disruptions from the Omicron COVID-19 variant and adjusted workforces following the seasonal hiring increase during the holidays. In December, claims reached a half-century low of 188,000 as employers attempted to retain workers amid labor shortages.
“The surge in COVID cases has created new headwinds for the economy even as tailwinds, including the federal government’s fiscal boosts, are waning,” Bankrate senior economic analyst Mark Hamrick said in a note. “The detrimental combination of supply chain constraints and the shortage, or lack of availability, of workers amid the Omicron surge is weighing on the nation’s economic recovery.”
Continuing claims, which tracks filers still collecting regular state unemployment benefits, were also up sharply last week to more than 1.6 million.
Even as Omicron’s spread may be slowing, payrolls will be a bit slower to respond to falling COVID cases than the real-time activity data, according to Pantheon Macroeconomics Chief Economist Ian Shepherdson.
The previous week’s snapshot coincided with the survey period for January’s “main” unemployment, set for release in early February. Hamrick pointed out that slowdowns in job creation or restoration in November and December resulted in an average 224,000 jobs added to payrolls, compared to 537,000 per month for the full year.
“It is hard to make the case for a huge acceleration in hiring this month,” he said.
December’s unemployment report came in at a miss of more than 250,000 at 199,000 vs. the 450,000 jobs added experts had anticipated. Although the labor market posted a 12th consecutive month of job growth, muted hiring in the service weighed on broader employment growth. Economists also suggested January’s report could see more significant Omicron-related impacts to the monthly labor market data.
Despite the recent ebb in labor market recovery, the Conference Board’s recent assessment of consumer sentiment indicated respondents remained optimistic about the labor market recovery in the recent period, but less so about conditions in the year ahead. Of participants in the survey responding to the component of the study that tracks perceptions about labor market conditions, 22.7% said they expect more jobs going forward, down from 24.2% in December. Meanwhile, 15.7% expect fewer jobs six months out, up from 14.7%.
“Even as a surge in Omicron cases is temporarily shuttering businesses, consumers’ views about the labor market remain positive, likely reflecting optimism that the effects of the variant will be temporary,” wrote High Frequency Economics Chief U.S. Economist Rubeela Farooqi in a note.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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