New filings for jobless benefits last week jumped to 286,000, the second sharp increase in a row from 231,000 the week before as the surge in omicron cases led to temporary layoffs across the country, according to government data released Thursday.
Despite a tight labor market where companies are fighting to retain their workers, the spread of the omicron variant, which has led to record numbers of cases and hospitalizations, had a significant impact on sectors that are most vulnerable like restaurants and retail.
The pullback in foot traffic and in-person spending, reported by the Fed’s beige book, have most likely caused small businesses that rely on these activities to close temporarily.
Our preferred measure—the 13-week moving average—recorded a break in trend for the first time since February 2021 as the weekly number for new claims exceeded the 13-week trend level at 234,000 for the week ending Jan. 15.
But unlike the delta surge, the impact of the fast-spreading omicron variant will be less severe and have a shorter time span.
We expect new claims will remain elevated above the pre-pandemic level for several more weeks as the market absorbs the full impact of the surge before returning to the trend of the October-December period.
Seasonal factors continued to play a key role in driving up new jobless claims, accounting for about 50,000 new claims for the week ending Jan. 15.
The total number of claims for all jobless benefit programs for the week ending Jan. 1 increased 180,114 to 2.13 million, remaining significantly lower than a year ago at 16.95 million.
On the state level, the largest increases in new claims for the week ending Jan. 8 were from California (up 11,295), New York (up 10,639) and Texas (up 10,437).
