New jobless claims increased for the first time in six weeks, yet they remained under the pre-pandemic level despite a significant recent increase in layoff announcements.
New filings for unemployment benefits increased by 7.1% to 196,000 for the week ending Feb. 4, the Labor Department reported on Thursday.
While the claims data often fluctuates during the first weeks of the year, the underlying trend continued to show a consistently strong labor market, which added more than half a million net jobs in January.
For example, our preferred measure of jobless claims—the 13-week moving average—declined for the fourth straight week to 211,000, also below the pre-pandemic level at 218,000.
With demand for workers near a historic high, it has been easier for laid-off workers to find new jobs without filing for unemployment insurance.
The takeaway
Still, the future will most likely be less rosy. There is a lag of up to three months between layoff announcements and the actual end of employment. For this reason, we should see a continuing uptick in claims in the next couple of months.
On top of that, the rate hikes have been felt only in a couple sectors of the economy like tech and housing, especially among large firms that hired too aggressively during the pandemic.
It will take the economy more time to feel the full weight of higher borrowing costs and slowing demand.
