Initial jobless claims inched up by 11,000 last week, most likely a temporary spike as most of the increase came from New York and California with 16,000 and 6,000 new claims, respectively, according to government data released Thursday.
Despite the normal fluctuation of the claims data, new filings for jobless benefits remained close to their 2019 pre-pandemic level as the economy approaches full employment.
The labor market continued to be driven by robust demand, as recent data on job openings and employment has shown, giving businesses less room for layoffs.
The total number of continuing claims was also up slightly last week, to 1.49 million from 1.47 million in the prior week.
The inflation spike because of skyrocketing oil and commodity prices, together with rising interest rates, will certainly slow down growth this year. As a result, the imbalance between labor demand and supply will unwind somewhat as the recovery moderates and labor supply continues to be replenished with COVID-19 receding.
Unless the economic shock stemming from the current geopolitical conflict prolongs, though, we should expect the economy to transition from robust growth to slower but more stable growth as the Federal Reserve continues to craft a soft landing.
Barring a new economic shock, the economy should be back to a cruising speed like what we saw in the years leading up to the pandemic. We expect initial jobless claims to stay close to the 2019 average level for the next couple of months with risks to the upside.