First-time unemployment filings came in lower in the latest weekly data, continuing a recent downward trend in jobless claims as Omicron-related pressures on the labor market begin to abate.
The Labor Department released its latest weekly jobless claims report Thursday at 8:30 a.m. ET. Here were the main metrics from the print, compared to consensus estimates compiled by Bloomberg:
Initial jobless claims, week ended Feb. 5: 223,000 vs. 230,000 expected; prior week of 238,000 upwardly revised to 239,000
Continuing claims, week ended Jan. 29: 1.621 million vs.1.615 million expected; prior week of 1.628 million downwardly revised to 1.621 million
Filings for unemployment insurance have fallen consistently in recent weeks after a temporary surge in mid-January to a print of nearly 300,000, the highest level since October. The rush of U.S. workers applying for benefits was attributed to disruptions from the Omicron variant of COVID-19 and adjusted workforces following the seasonal hiring increase at the end of 2021.
Ian Shepherdson, chief economist for Pantheon Macroeconomics, in a note after last week’s read anticipated claims would be unchanged in the next weekly print due to a seasonal quirk — with new cycle lows likely in mid-March, about six weeks later than expected in the absence of Omicron.
In December, before the latest virus wave curbed the labor market recovery, claims reached a half-century low of 188,000 as employers attempted to retain workers amid labor shortages. Despite edging higher in January, weekly jobless claims remain far below pandemic highs and well off this time last year when figures came in at over 800,000.
Omicron’s impact on the U.S. workforce has shown signs of easing. In an upside surprise from what economists anticipated, the main employment snapshot — the Labor Department’s monthly jobs report — showed U.S. payrolls recorded a stunning jump in January despite a record number of Americans calling in sick from work as COVID spread rapidly at the start of the year. The agency reported Friday that non-farm payrolls surged by 467,000 for the month, in a sharp upturn from 125,000 forecasted by economists in Bloomberg’s survey.
“[The report] suggested that while Omicron had a clear impact on day-to-day life in the United States, the labor market impact was less severe than expected,” Indeed economic research director Nick Bunker said. “As we have seen in the past, the economic fallout from each successive wave of the pandemic has been smaller and smaller.”
Last week, the four-week moving average for new jobless claims still rose by 15,000 to 247,000 for the week ended Jan. 29 due to the increases in claims in prior weeks. Continuing claims, which tracks filers still collecting regular state unemployment benefits, are expected to come in again at around 1.6 million.
Friday’s jobs report showed the unemployment rate ticked up slightly to 4.0%, driven by improvement in labor force participation, which rose to 62.2%, or the greatest level since March 2020. The figure suggests more Americans were re-entering the workforce, but many still remain on the sidelines.
“While total labor demand—employment plus vacancies—is roughly in line with its pre-pandemic trend, labor supply remains substantially depressed,” economists at Goldman Sachs said in a note this week, pointing to 1.7 million missing workers.
“Workers give three main reasons: they have COVID-related concerns, they have a financial cushion, or their lifestyle has changed,” Goldman Sachs said. “These explanations suggest that some people are likely to come back if virus spread falls or antiviral pills reduce health risks, and others are likely to come back once they exhaust their savings, especially now that most special pandemic fiscal transfer payments have expired. In support of this expectation, most prime-age workers who left the labor force say they intend to re-enter.”
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc