Weekly jobless claims in the United States unexpectedly rise

Last week, the number of Americans filing new claims for unemployment benefits unexpectedly increased, but remained at levels associated with tightening labour market conditions. The Labor Department reported on Thursday that initial claims for state unemployment benefits increased by 23,000 to a seasonally adjusted 248,000 for the week ending Feb. 12. Reuters polled economists, who predicted 219,000 applications for the most recent week.
Claims had been declining since reaching a three-month high in mid-January, when corona virus outbreaks fueled by the Omicron variant raged across the country. According to a Reuter’s analysis of official data, the United States is reporting an average of 145,769 new COVID-19 infections per day, down from more than 700,000 in mid-January.

There is a severe labour shortage, with a near-record 10.9 million job openings at the end of December. Employers have been able to retain their employees as a result, driving claims down to pre-pandemic levels. Claims have fallen from a peak of 6.149 million in early April 2020.”While some level of labour market churn should continue in the near term,” said Veronica Clark, an economist at Citigroup in New York, “we would not be surprised to see claims fall even further below pre-pandemic levels in the coming months.”
“This would indicate an overall low level of layoffs as businesses struggle to achieve desired levels of employment in the first place.”

Last week’s data covered the period when the government surveyed businesses for the nonfarm payrolls portion of the February employment report. Claims are significantly lower than the 290,000 level reached in mid-January. In January, the economy added 467,000 jobs. The labour market is tightening, resulting in strong wage growth and high inflation.

The minutes of the Federal Reserve’s meeting on January 25-26, published on Wednesday, revealed that “many” officials at the United States’ central bank “viewed labour market conditions as already at or very close to those consistent with maximum employment. “The Fed is expected to begin raising interest rates in March to combat inflation, with economists predicting up to seven increases this year.