Worker filings for unemployment benefits hit the lowest level in more than half a century last week as a tight labor market keeps layoffs low.
Initial jobless claims, a proxy for layoffs, fell to 184,000 in the week ended Dec. 4, the lowest level since September 1969, the Labor Department said Thursday. That was close to a recent record total of 194,000 recorded in late November.
The prior week’s level was revised up to 227,000. The four-week moving average, which smooths out weekly volatility, fell to 218,750.
Unemployment claims have been steadily falling all year as the labor market has tightened. They have now fallen below where they were before the pandemic caused layoffs to surge in March 2020. Claims averaged 218,000 in 2019, the year before the pandemic hit the U.S.
Economists say seasonal volatility around the holiday season may have contributed to last week’s low number.
The decline in new claims is an indication that employers are reluctant to lay off workers as jobs are plentiful, consumer demand is high and the pool of prospective workers remains lower than before the pandemic.
Employers have been offering higher wages and increased benefits to attract workers. Hourly private sector wages were up 4.8% in November from the previous year, the Labor Department said Friday, the same level as in October and well above where they were before the pandemic.
There were 11 million job openings in October, up from 10.6 million in September, according to the Labor Department. By contrast there were 7.4 million unemployed workers that month, a sign of the tight labor market.
Layoffs held steady at 1.4 million in October, the department said.
“We expect claims will start to more consistently hover around pre-Covid averages of 220,000 or perhaps slightly lower given current tight labor market conditions,” said Nancy Vanden Houten, lead economist at Oxford Economics.
More unemployed workers should eventually get new jobs as they exhaust their benefits, she added, assuming the Omicron variant doesn’t disrupt the labor market further.
The unemployment rate fell to 4.2% in November from 4.6% in October, the Labor Department reported Friday. The share of people ages 25 to 54 who are either working or looking for work rose to 82.1% from 81.9%, a sign that prime-age Americans are starting to get back into the labor force. But the labor-force participation rate for that age group remains below where it was in February 2020, when it stood at 83.1%.
“The overriding dynamic in the job market of late has been this shortage of workers,” said Mark Hamrick, senior economic analyst at Bankrate. “The issue of fresh job loss has not been key for many months now.”
Despite the recent gains, the labor market still has room to recover. As of November, there were 3.9 million fewer jobs than in February 2020, before the pandemic disrupted the economy. And there were 2.4 million fewer people in the workforce.
“We know that the job market is not going to look like it did exactly before the pandemic,” said Mr. Hamrick. “But I think it’s important to note that there’s been substantial healing.”
Write to David Harrison at [email protected]
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