US jobless claims fall for the second straight week

The Labor Department said Thursday that for the first time ever, the number of claims fell from 261,000 in the week ending January 29 to 238,000. Claims soared to 290,000 in the week ending January 15 as the number of cases swelled due to the Omicron wave and sickened millions.

Jobless claims hit pre-pandemic lows in November after increasing by more than 6 million at the start of the pandemic in early 2020. Claims then hit a record low in early December, as business held off for more workers due to persistent labor shortages. ,

The drop in early claims could be a reassuring sign ahead of January’s employment report, which expects job gains to slow or fall due to Omicron-induced disruptions last month.

Economists say the low totals for jobless claims indicate that demand for labor remains strong. It could be a reassuring sign ahead of January’s employment report, which is expected to show slowing or lower job gains due to Omicron-induced disruptions last month.

Economists polled by the Wall Street Journal expect employers to add 150,000 jobs in January, though many also expect payrolls to fall last month. This would represent a sharp drop from last year’s average job growth of 537,000 monthly.

“If we see a decline in initial claims, it would be a sign that the economy, and in particular the labor market, is coming under pressure from the Omicron wave,” said Gus Faucher, chief economist at PNC Financial Services Group. He expects initial claims to continue to decline in numbers over the next month or two.

Mr Faucher predicts a drop in 400,000 jobs in January. But he sees that the labor market has boomed relatively quickly after the number of Covid-19 cases dropped further.

“The demand for labor is still very strong,” he said.

Michael Pearce, senior economist at Capital Economics, said he expects the weak payroll performance to materialize quickly in the coming months.

He said other economic indicators point to a healthy labor market in which jobs are plentiful and employers are struggling to lure workers.

There were 10.9 million jobs in December, up from 10.8 million in November, according to Labor Department data released earlier this week. The report showed layoffs and dismissals fell to a record low of 1.2 million and 4.3 million were laid off in December.

“It’s still laying off record numbers of workers and the firms have what they have,” Mr Pierce said. This is in line with the low number of initial jobless claims, he said.

A separate report from the Labor Department showed that the tight labor market is pushing up workers’ wages.

The report said that wage and benefit costs increased by 4% in the fourth quarter of 2021 compared to the same period last year.

On January 26, Federal Reserve Chairman Jerome Powell said the labor market had fully recovered from the pandemic and was now firing on all cylinders. That should prompt Fed officials to raise interest rates sooner, perhaps as early as March, he said.