Americans filing for unemployment benefits increased in the week ending Jan. 1, running contradictory to analyst expectations, and may be a precursor to the coming weeks where more workers are expected to get laid off with one of the main reasons being Omicron-related business continuity issues.
“[T]he advance figure for seasonally adjusted initial claims was 207,000, an increase of 7,000 from the previous week’s revised level,” according to a news release (pdf) Thursday by the labor department. “The previous week’s level was revised up by 2,000 from 198,000 to 200,000. The 4-week moving average was 204,500, an increase of 4,750 from the previous week’s revised average. The previous week’s average was revised up by 500 from 199,250 to 199,750.”
The number of seasonally adjusted unemployed in the United States was approximately 1,754,000 during the week ending Dec. 25, an increase of 36,000 from the previous week.
“The 4-week moving average was 1,798,750, a decrease of 61,250 from the previous week’s revised average. This is the lowest level for this average since March 14, 2020, when it was 1,730,750,” from the report.
The three highest insured unemployment rates in the week ending Dec. 18, 2021, were in Alaska (3.1), the Virgin Islands (2.6), and New Jersey (2.3), while the largest increases in initial claims for the week ending Dec. 25, were in New Jersey (+4,660), Pennsylvania (+3,320), and Ohio (+2,615).
Economists polled by media outlets expected anywhere from 195,000 to 197,000 claims. Although job application numbers typically go up during the holidays, the last season saw an acute shortage of workers.
According to job-search engine Indeed, there were around 12 million openings at the end of last month. Even as unemployment claims rise, the rate remains at historically low levels in a tight labor market where the employees have the upper hand.
Businesses are giving out bonuses, incentives, and benefits in order to retain workers as the economy returns back to normalcy. But this trend has been disrupted by the arrival of the highly-transmissible Omicron variant which has spiked in recent days to account for over 95 percent of all COVID-19 cases in the country, according to the latest data from the Centers for Disease Control and Prevention (CDC).
However, unlike the Delta variant, scientists have pointed to milder symptoms for those infected with Omicron, resulting in fewer hospitalizations. Experts claim that the latest hike in claims is temporary and is expected to come down soon.
“Assuming any layoffs related to Omicron are limited amid tight labor market conditions, we expect initial claims to continue to hover around the (200,000) mark,” Nancy Vanden Houten, lead economist at Oxford Economics, told AP.
According to economists surveyed by Bankrate, Omicron will weigh on the job markets during the first three months of the year, after which, there will be steady growth that ends with the unemployment rate dropping to 3.8 percent by the end of the year. U.S. employers are predicted to add an average of 292,000 new positions monthly in 2022.
In the recently released minutes of Dec. 14–15 policy meeting, the Fed said, “Participants pointed to a number of signs that the U.S. labor market was very tight, including near-record rates of quits and job vacancies, as well as a notable pickup in wage growth.”
The central bank is expected to raise Interest rates to tame the 39-year-high inflation that has been hurting the economy with higher prices from everything from food and clothes to gas and electronics.
The jobs report for December 2021 will be published by the labor department on Friday.