The number of new applications for unemployment benefits rose by 23,000 last week to 248,000, more than expect but still low enough to signal further improvement in the labor market.
Weekly jobless claims are seen as a proxy for layoffs and have been watched closely in recent weeks for indications about how the omicron variant of COVID-19 has been affecting the labor market.
Apart from a small omicron jump, jobless claims have been in a steady decline over the last year. Around this time in February 2021, new claims were averaging more than 800,000 per week.
“Despite the uptick, we expect initial claims to continue to grind back toward 200k. Layoffs are expected to be minimal in a tight labor market where employers continue to face difficulty hiring workers,” said economists with Oxford Economics after the report.
STRONG JOBS REPORT SHOWS PUBLIC INCREASINGLY SHAKING OFF COVID-19
Job growth, meanwhile, has been strong. The economy shattered expectations last month and added 467,000 jobs, much more than economists anticipated. Additionally, November and December’s worse-than-forecast reports were revised up by a weighty 710,000 jobs.
Still, the economy is many jobs short of pre-pandemic levels, when unemployment sat at an ultra-low 3.5%. The current 4% unemployment rate is slightly up from December, although that is because of an increase in the country’s labor force participation rate.
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The most pressing problem facing officials right now, though, is inflation. Last week’s report from the Bureau of Labor Statistics found that consumer prices have increased by a colossal 7.5% for the 12 months ending in January, the fastest clip in four decades.
The Federal Reserve is gearing up to hike interest rates in response to the higher prices. The central bank indicated during its last meeting in January that there will be multiple rate hikes this year, with the first likely coming in March.
