The number of weekly jobless claims in the U.S. hit a three-month high on Jan. 15. The 286,000 claims are higher than the previous weeks’ 231,000 and beat the Dow Jones estimate of 225,000. This is the highest jobless claims number since Oct. 16 of last year.
New York saw jobless claims decrease by 14,011; California saw a 6,075 increase. Texas and Missouri saw large drops in claims numbers. As of Jan. 1, 2.13 million people received unemployment compensation, a rise of 180,114 individuals.
Experts believe the record jobless claims numbers are the result of unfavorable seasonal factors after the holidays and the spread of the Omicron COVID-19 variant. Despite the increase in jobless claims, some experts say they are not worried as they believe the labor market is strong enough.
In an interview with Reuters, John Lynch, chief investment officer at Comerica Wealth Management in Charlotte, North Carolina, called the rise in jobless claims is a “temporary blip” due to the Omicron wave. Lynch expects job growth to improve due to the “global cyclical recovery.” The U.S. unemployment rate is at a 22-month low as people have been allowed to work again. Claims numbers have also fallen as more states open back up. During the lockdowns in April 2020, 6.19 million claims were filed.
Some economists warned that fluctuations in jobless claims are likely to continue in the coming months as well.
“As we have gotten lower and lower in jobless claims, we should expect some volatility… It’s never a straight line… Someone who’s dependable, who’s been on the job for a year and doesn’t need to learn the ropes—you don’t want to lay that person off when you’re expecting a spring thaw [in economic activity],” Nela Richardson, chief economist at the human-resources software firm Automatic Data Processing Inc., told The Wall Street Journal.
A few experts feel that the spike in jobless claims could be an indicator of slowing economic activity. Manufacturing activity and retail sales fell in December.
“The higher layoffs are a cautionary tale for the economy where despite inflation pressures, the Fed will have to proceed with their interest rate hikes at a measured pace… The economy may be slowing down more than previously believed,” Christopher Rupkey, chief economist at FWDBONDS in New York, stated.
According to an early January survey by the Census Bureau, 8.8 million adults in the United States were not in a position to work because they were either sick with COVID-19 or were taking care of someone with the infection. The number exceeds the 6.6 million recorded in Jan. 2021. From the second half of 2021 until November, American workers were quitting more than four million jobs per month on average.
The number of continuing claims for the week ending on Jan. 8 rose up 84,000 to 1.64 million. Continuing claims are an approximate measure of the number of individuals receiving benefits.
“Omicron has put a wrench in where we stand on the labor market front, but with hiring challenges, employers are likely trying to hold onto their workforce… So this could be a short-term surge in jobless claims,” Mike Loewengart, managing director of investment strategy at E-Trade, told CNBC.
The number of job postings is 60 percent higher when compared to the pandemic period. However, the weekly average has fallen by 1.3 percent as of Jan. 14. According to economist AnnElizabeth Konkel, this drop is due to the fact that many people are sick, including those responsible for hiring workers. There is also uncertainty about consumer demand, due to which many businesses are unable to estimate how many new employees to hire.