Labor Department Reports US Weekly Unemployment Claims Dropped at End of January

People line up outside a hoping to find assistance with their unemployment claim in a file photo. Bryan Woolston/Reuters

A Labor Department report on Feb. 3, showed that the number of Americans filing new weekly jobless claims fell 23,000 to 238,000, more than expected last week, as the Omicron variant subsided, a second straight weekly decline.

Economists polled by Reuters had earlier forecast 245,000 jobless benefit applications.

Jobless applications fell sharply in Ohio, Kentucky, and Illinois, offsetting rises in Michigan, California, Indiana, and Pennsylvania.

Continuing claims meanwhile have dropped 44,000 to 1.628 million.

Claims have dropped from a record high of 6.149 million in early April 2020.

The fall in unemployment benefit claims suggests that the slowdown in job growth caused by the virus was likely temporary, after a recent surge in claims in mid-January, which had boosted initial claims to a three-month high.

The number of infectious cases fell to under 400,000 new cases a day, about half of what it was just weeks ago.

The government will release January’s highly anticipated U.S. employment numbers on Feb. 4, reporting the number of new jobs created last month and the latest unemployment rate.

In December, the U.S. economy added 199,000 new jobs with unemployment at 3.9 percent.

Between Dec. 29 and Jan. 10, 8.8 million Americans reported not being at work because of virus-related reasons, according to the Census Bureau’s Household Pulse Survey in mid-January.

Many workers out sick or in quarantine without pay are counted as unemployed in the Labor Department’s statistics, even if they still have a job with their companies.

Some analysts estimate that January’s figure may be similar, even smaller, after the Omicron variant surged and waned in early January after employment data was collected by the Labor Department at mid-month.

The services sector was the most impacted by the recent CCP virus wave.

“There is some nervousness surrounding the forthcoming January employment report from the Labor Department, after weak high frequency data and ADP’s reported loss of 301,000 jobs in private payrolls,” said Mark Hamrick, senior economic analyst at Bankrate.

The Feb. 2 ADP National Employment report showed that private payrolls declined in January for the first time in a year, raising a strong possibility that the overall economy shed jobs last month.

Many American employers are looking for more workers, despite about 6.9 million workers still remaining unemployed.

Companies are hanging on to the workers they have and are searching for more as the labor market tightens.

“The reality is that job cuts remain remarkably low, which is also affirmed by the latest numbers from Challenger, Gray & Christmas. Challenger’s account of January job cut announcements, at just above 19,000, is little changed from December. Some of the cuts are said stemming from vaccine refusals, as well as store, plant, and facilities closing,” said Hamrick.

There were 10.4 million job openings in the United States at the end of November.

However, many of the available jobs are in low-wage service positions that unemployed skilled individuals find undesirable, while some of the new job openings are not where unemployed workers live.

“January hiring may well be the weakest in a year as the Omicron wave sidelined millions of workers,” said Hamrick.

The U.S. economy overall is positive, with growth of 5.7 percent in 2021, the fastest full-year gain since 1984, the Commerce Department reported last week.

Productivity rebounded 6.6 percent in the fourth quarter of 2021.

Compared to the fourth quarter of 2020, productivity grew at a 2.0 percent pace, with a total increase of 1.9 percent in 2021, slowing from 2.4 percent in 2020.

The U.S. economy showed resiliency as it struggled to cope last year with two CCP virus variants from mid-2021 onward that caused a slow down in recovery, with supply chain bottlenecks that left store shelves empty and a 7 percent surge in inflation over the previous year, which was the highest rate rise since 1982.

A record 6.4 million jobs were created last year, with most of the jobs lost due to the pandemic in 2020 being recovered.

However, the workforce is still about 2 million jobs smaller than before the pandemic.

“That would serve as a reminder of the high degree of volatility and uncertainty during these challenging times with a pandemic still raging,” added Hamrick.

“If we continue to see more encouraging signs with COVID, it would be reasonable to expect the economic recovery will gather momentum again.”

Rising inflation is forced Federal Reserve policymakers last week to announce that they would boost interest rates as early as March after keeping it near 0 percent since the CCP virus hit the United States in March 2020.

The Fed could increase the rate about three to five times this year, which could have a broad effect on borrowing costs for consumers and businesses.