Initial jobless claims fell in back-to-back weeks as the omicron variant’s surge continued to fade in the second half of January, bringing last week’s number closer to the pre-pandemic average, according to government data released Thursday.
The headline number dropped to 238,000 on a seasonally adjusted basis for the week ending Jan. 29, a decline of 23,000 from a week earlier. The claims, though, remained above the 13-week moving average—our preferred measure to control for fluctuations in data—for the third week in a row.
We expect the recent bump in new filings to quickly dissipate as the impact from the omicron variant’s peak in mid-January passes.
The tight labor market is making layoffs much more unlikely as companies fight to hold on to their workers, contributing to the unusual seasonal distortions around the claims data.
As a result, while seasonal factors had predicted an increase of 4.2% from the previous week on an unadjusted basis, the actual number decreased by 4.4%.
Such distortions won’t go away until the waves of new variants subside. The good news is that it has become more likely that we are transitioning from a pandemic to an endemic. A year after more than 18.5 million of workers were collecting some form of unemployment benefits, the total number of claims for the week ending Jan. 15 stood at 2.1 million.
The claims data was released the day before the monthly jobs report for January from the Bureau of Labor Statistics. That report will not reflect data from the last two weeks of January showing the improvement in the labor market. We should expect the January report to be weak, and then improve as the omicron variant eases.
