Initial jobless claims fell for the third straight week as the labor market recovers from the omicron surge.
New filings for jobless benefits dropped by 16,000 to 223,000 for the week ending Feb. 5 on a seasonally adjusted basis, according to data released by the Labor Department on Thursday. The weekly claims figure is now only 5,000 from reaching its pre-pandemic level of 218,000.
The decline in new jobless claims was well in line with our expectation of a quick turnaround after the series rose sharply in the first two weeks of January, when omicron cases peaked.
While the current labor market shares some resemblance with the 2019 market—when the economy was near full employment before the pandemic—the dynamic is significantly different this time: Millions of workers have left the workforce.
The persistent low labor participation rate in recent months has offered no sign of a quick recovery, even though the unemployment rate has been falling rapidly.
Barring a new wave of the coronavirus, new jobless claims will most likely continue to fall because of labor shortages, which have left businesses reluctant to lay off their workers.
We should expect that without any more distortions from coronavirus cases—an open question—jobless claims will be less volatile moving forward.
