By Jeffry Bartash
The numbers: Applications for U.S. unemployment benefits surged by 55,000 last week to 286,000 and hit a three-month high in a sign the omicron outbreak spurred some layoffs and kept more people out of work in January.
Economists polled by The Wall Street Journal had forecast initial jobless claims to total a seasonally adjusted 225,000 in the seven days ended Jan. 15.
The number of people already collecting jobless benefits, meanwhile, rose by 84,000 to 1.64 million, the Labor Department said Thursday . These so-called continuing claims have returned to pre-crisis levels, however.
Economist warn against reading too much into the big increase last week. The government’s method of adjusting jobless claims for seasonal swings is often skewed from Thanksgiving through the Martin Luther King Jr. holiday. The problem has been made worse by the pandemic.
Raw or unadjusted claims actually sank last week to 337,417 from 420,835.
“As we get into late-January and February, this seasonal issue will be less of a problem and it will be easier to take claims at face value,” economists at Jefferies said in a note to clients. “But for now, it is appropriate to be a bit skeptical or strength or weakness in claims.”
Big picture: The record coronavirus omicron wave kept more people out of work the past month and may have spurred temporary layoffs. The end of holiday-season jobs was likely another contributor.
Yet the number of people losing jobs is still extremely low and likely to stay that way. Businesses are struggling to hire amid the worst labor shortage in decades and stiff competition for workers. That suggests still-strong demand for goods and services and bodes well for the U.S. economy.
Key details: New jobless claims rose the most in California. They fell sharply in New York, Missouri and Texas.
Looking ahead: Economists do not not expect the problems caused by omicron to last long and suspect jobless claims will subside again soon.
“Don’t read too much into that,” said chief economist Scott Brown of Raymond James. “Weekly figures can be a bit erratic at the start of the year, and the seasonal pattern may have changed through the pandemic, but Omicron likely had an impact.”
Market reaction: The Dow Jones Industrial Average (DOW:DJIA) and S&P 500 (S&P:SPX) were set to open slightly higher in Thursday trades. Stocks have retreated recently as interest rates have risen. Higher yields tend to hurt equities.