Topline
Despite falling to their lowest levels during the pandemic in recent weeks, the number of new unemployment claims unexpectedly increased last week, as experts warn a record surge in coronavirus cases—spurred by the rapidly spreading omicron variant—is already starting to slow the economic recovery.
Economists were expecting about 195,000 new jobless claims last week.
Key Facts
About 269,000 people filed initial jobless claims in the week ending January 1, an increase of 7,000 from the previous week, according to the weekly data released Thursday.
Economists were expecting about 195,000 new claims last week, according to Bloomberg data.
In another concerning sign for the labor market, the previous week’s estimated level was revised up by 2,000, from 198,000 to 200,000, the Labor Department said.
This is a developing story. Please check back for updates.
What To Watch For
The Labor Department’s December jobs report is set to be released Friday and should provide a broader picture of the job market, but it won’t capture the impact of the latest Covid surge, Moody’s Analytics Chief Economist Mark Zandi wrote in a weekend research note. Economists forecast the U.S. added about 422,000 jobs last month, compared to 210,000 in November, but the Labor Department also surveys around the 12th of each month, meaning it will take “a few more weeks” before omicron’s economic impact is reflected in the data, he said.
Key Background
The new unemployment data comes after a promising jobs report on Wednesday showed a strengthened labor market recovery in early December, before omicron became the dominant strain in the United States and helped push new daily cases from about 36,000 on December 12 to an all-time high of more than 1 million on Monday. Led by strong growth in the service sector and transportation industry, private employment increased by 807,000 from mid-November to mid-December, according to the ADP’s National Employment Report released Wednesday, surging past expectations calling for 375,000 new jobs. “The pandemic continues to call the shots for the economy,” Zandi said Sunday. “The delta wave significantly weighed on growth and fanned inflation this past fall, and omicron is already doing significant economic damage: Credit card spending turned soft in recent weeks, the National Hockey League suspended play… and the airlines are struggling with flight cancellations.”
Further Reading
Record 4.5 Million Americans Quit Jobs In November As Employers Struggle To Retain Workers (Forbes)
December’s Stunning Job Growth Doesn’t Tell The Whole Story—Omicron Sparked ‘Significant Economic Damage’ (Forbes)
Source: https://www.forbes.com/sites/jonathanponciano/2022/01/06/number-of-americans-receiving-unemployment-benefits-unexpectedly-rises-as-experts-caution-omicron-surge-could-slow-economic-recovery/