Unemployed claims, a proxy for retrenchments, rose slightly last week.
The number of Americans filing claims for unemployment benefits from states rose slightly last week, prompting speculation that the Omicron variant of the coronavirus could cast a shadow over the recovery of the U.S. labor market.
Weekly unemployment claims – a power of attorney for retrenchments – rose to 207,000 in the week ending January 1, the U.S. Bureau of Labor Statistics said Thursday. This is an increase of 7,000 compared to the previous week’s revised level.
Even though the heading number has shifted, it is still low by historical standards, indicating that a tight labor market is likely to continue to obscure any disruption stemming from Omicron, whose proliferation caused flight cancellations and a spate of sick workers.
“The Omicron boom in coronavirus cases may have helped support claims, but it’s hard to say conclusively as the claims data is still subject to seasonal noise,” said Nancy Vanden Houten, chief economist at Oxford Economics. “Assuming any retrenchments related to Omicron are limited amid tight labor market conditions, we expect initial claims to continue to move around the 200,000 mark.”
The four-week moving average for unemployed claims – which helps smooth out the weekly noise – was 204,500, an increase of 4,750 from the previous week’s revised reading.
And the number of Americans currently collecting regular unemployment benefits – a measure known as continuing claims – rose 36,000 to 1.75 million in the week ending Dec. 25.
“Continued demands are currently around pre-pandemic levels and could eventually drop further as more workers return to the labor market to benefit from solid wage gains. However, Omicron can delay that process, ”said Vanden Houten.
A more comprehensive snapshot of the U.S. labor market is on Friday with the release of the Department of Labor’s accurate monthly work report.
That report will look back on December, but some economists warn that Omicron could have a big impact on January figures.
The new variant is not the only headwind facing the US labor market recovery. A constant shortage of workers is also delaying job creation.
On Tuesday, the Department of Labor reported that there were 10.6 million jobs at the end of November, which is high by historical standards – while Americans feel so confident about their job prospects that they continue to quit their jobs in record numbers.
Economists are scratching their heads over why there are so few workers available for businesses to hire, but factors ranging from fear of contracting COVID-19, to childcare challenges, baby boomers taking early retirement, and workers unlocking their entrepreneurial spirit to start businesses their own are believed to be factors.
Whatever the cause, workers are in a good bargaining position – and that leverage is evident in average hourly earnings, which rose 4.8 percent in November from the same period a year ago.