The number of Americans filing for unemployment benefits rose to its highest level in three months as the fast-spreading omicron variant continued to disrupt the job market.
Unemployment claims rose for the third straight week — by 55,000 to 286,000, the highest since mid-October, the Labor Department reported Thursday. The jump in claims marked the largest one-week increase since mid-July.
The four-week average for claims, which dampens weekly volatility, rose 20,000 to 231,000, the highest since late November. Economists said last week’s claims may have been inflated by the Labor Department’s attempts to tweak the numbers to account for seasonal variations; unadjusted, claims fell last week by more than 83,000.
“We could see one more week of significantly higher claims before they are expected to peak,” analysts at Contingent Macro Advisors predicted. “It deserves to be watched closely.”
The Federal Reserve could reconsider its plans
The Federal Reserve could reconsider its plans to ease its massive support for the economy if claims remain above 250,000 ahead of the Fed’s policy meeting in March, Contingent said.
While the fast-moving omicron variant may cause less severe disease on average, COVID-19 deaths in the United States are increasing and modelers predict 50,000 to 300,000 more Americans could die by the end of the surge in mid-March.
The seven-day rolling average of new daily COVID-19 deaths in the United States has been trending upward since mid-November, reaching nearly 1,800 on January 19 – still below the peak of 3,300 in January 2021.
A rise in COVID-19 cases delayed what had been a strong comeback since last year’s short but devastating coronavirus slump. Unemployment insurance claims, an indicator of layoffs, had fallen steadily for about a year and by the end of last year had fallen below the pre-pandemic average of around 220,000 a week .
A total of 1.6 million people were receiving unemployment aid in the week ending January 8.
Companies cling to the workers they have at a time when replacements are hard to find. Employers posted 10.6 million job openings in November, the fifth-highest monthly total on records dating back to 2000. A record 4.5 million workers left their jobs in November, a sign that they are confident enough to look at something better.
Unemployment fell to a pandemic low last month
The labor market has rebounded from last year’s brief but intense coronavirus recession. When COVID-19 hit, governments ordered shutdowns, consumers stayed home, and many businesses closed or reduced their hours. Employers cut millions of jobs in March and April 2020, and the unemployment rate soared to 14.7%.
But massive government spending — and eventually the deployment of vaccines — brought the economy back. Last year, employers created a record 6.4 million jobs – but that still wasn’t enough to offset the unprecedented 9.4 million jobs lost in 2020. And hiring has slowed in November and December last year as employers struggled to fill vacancies.
Still, the jobless rate fell last month to a pandemic low of 3.9%.