The Labor Department said on Thursday that initial applications for unemployment insurance decreased last week and remained very close to their lowest level in more than 50 years.
Weekly jobless claims total 198,000
The overall number of unemployment claims for the week ending December 25 was 198,000, which was lower than the 205,000 Dow Jones projected and down 8,000 from the prior week.
The four-week moving average for claims fell to 199,250 after accounting for weekly volatility, which was the lowest number since October 25, 1969.
It plummeted by 140,000 to 1.72 million, the lowest amount since March 7, 2020, right before the Covid pandemic proclamation, according to continuing claims data, which is released a week after the headline figure.
The figures coincide with the Federal Reserve scaling back on some of the historically accommodating policy it put in place during the crisis and indicate an increasingly tight labour market.
The national unemployment rate is now 4.2%, a significant decline from its peak of 14.8% in April 2020.
However, the rise in the omicron variety may cause the labour market to experience some downward pressure.
Initial claims are quite low, and subsequent claims are also very modest and steadily falling.
Businesses are not laying off workers because there is a high demand for labour and a lack of available workers. Workers who do lose their jobs can easily find new ones, according to Gus Faucher, chief economist at PNC Financial. However, the omicron variety poses a significant short-term downside risk to the prospects for job growth.
According to data through December 11, the overall number of people receiving benefits across all programmes increased by roughly 40,000 to 2.18 million despite the declining trend in initial claims.
The cessation of benefits under pandemic-era programmes that offered enhanced and extended payments has contributed in part to the reduction in claims. Even so, the total number of people receiving benefits is a long cry from the 20.5 million people who were enrolled in the various programmes one year ago.
“It was anticipated that a fading of the pandemic, reopenings at schools and daycare facilities, and the gradual reentry into the workforce of people who lost their unemployment insurance benefits in September will help relieve labour shortages and enable continued strong job growth next year,” Faucher added.
However, an increase in coronavirus cases brought on by the omicron “may delay the labour force recovery, at least for the next few months.”
People are leaving their jobs at a record-breaking rate, many of them in search of better chances abroad as average hourly salaries rise in an inflationary environment the United States hasn’t experienced in decades.
In response to inflation, the Fed has accelerated the rate at which it is winding down its monthly bond purchases. The markets anticipate that programme to be finished in a few months, and that the central bank would begin hiking interest rates in March 2022.