Unemployment claims rise in US, but remain low in tight labor market

The Labor Department said Thursday that initial jobless claims, a proxy for layoffs, rose to a seasonally adjusted 248,000 last week from 225,000 last week. The four-week moving average, which smooths out volatility, fell slightly to 243,250.

New filings for unemployment benefits have largely remained below 250,000 per week since mid-November.

Continuing claims, a proxy for the total number of people receiving unemployment benefits through regular state programs, declined to 1.59 million for the week ended February 5 from 1.62 million a week earlier. Continuous claims are reported with an interval of one week.

Omicron’s outbreak caused millions of workers to be sick and called into businesses to temporarily close last month. Jobless claims accelerated in mid-January, but have since declined with an easing pandemic.

Economists expect a tight labor market to push claims of employers sticking to workers further downward.

“Overall, we expect the labor market to be on a strong trajectory this year,” Lidia Boussour, chief US economist at Oxford Economics, said in a note.

The labor market and the broader economy largely operate through the boom in Omicron affairs. US employers hired at a strong pace in January, adding 467,000 jobs. Wages rose 5.7% in January, well above the average of about 3% before the pandemic.

Retail sales, a measure of spending in stores, online and restaurants, rose solidly in January as consumers snatched up vehicles, furniture and construction materials.

Still, consumer inflation, which climbed last month at its fastest pace in nearly 40 years, is eroding consumers’ spending power as wages rise more slowly than the price of most goods and services.

Federal Reserve officials discussed an accelerated timetable for raising interest rates at their meeting last month, which began with a projected increase in March with more discomfort coupled with higher inflation.