Americans filing for initial jobless claims turned up in droves last week. The rise in the number of jobless Americans is a grim reminder that the pandemic is far from over.
Economists often refer to initial jobless claims as an indicator of the overall US employment scene. Present data shows a marked improvement in the job market but remains subject to the whims of coronavirus.
Initial Jobless Claims Reach 286,000, Highest Since October
Americans filing for initial jobless claims during the week ending January 15 reached 286,000. This is well above the Dow Jones estimates of 225,000.
In addition, the number was a hefty 55,000 increase from the previous week’s 231,000. The total marks the highest rate since Oct 2021. It also marks a turnaround after initial jobless claims hit their lowest level in 50 years a few weeks ago.
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Mike Loewengart, managing director at E-Trade, pointed to the Omicron surge as the culprit, saying it could be short-lived. “Omicron has put a wrench in where we stand on the labor market front,” he said.
Given the hiring challenges, employers will likely hold on to their workers. It means “this could be a short-term surge in jobless claims,” he observed.
Apart from Initial Jobless Claims, Continuing Claims Also Went Up
Meanwhile, continuing claims also rose by 84,000 to 1.66 million. Continuing claims are different from initial jobless claims. The latter deals with the first-time application for benefits by a newly-unemployed worker.
Meanwhile, continuing claims deal with those who are already receiving unemployment benefits. Continuing claims numbers are usually one week delayed compared to initial jobless claims.
The good news is that the four-week moving average for continuing claims declines by 55,250 to 1.66 million. This is the lowest rate recorded since the week ending April 27, 2019.
Based on data through January 1, total recipients of jobless claims, whether the first time or continuing, rose by 180,000 to 2.13 million. Among the states, California registered a surprising increase of 6,075 claims. Meanwhile, New York reported a decline of 14,011.
Unemployment Rate Falls, But Still Below Pre-Pandemic Numbers
Meanwhile, the US unemployment rate fell to 3.9%. This is after a bumper year where nonfarm payrolls grew considerably.
However, the total employment numbers are still 2.9 million jobs lower than it was in February 2020. The WHO declared a worldwide COVID pandemic the following month.
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In addition, labor force participation also remained below pre-pandemic levels. The current 61.9% rate is 1.5 percentage points below pre-COVID levels. Specifically, the labor force contracted by almost 2.3 million during the pandemic.
Watch the CNBC Television video reporting that Initial jobless claims rise to 286,000, well above the 225,000 estimates:
What do you think about the rising number of initial jobless claims this January? Do you think this will trend throughout the year? Or, will this be a blip concurrent with coronavirus surges?
Tell us what you think. Share your comments below.