New filings for unemployment benefits are again expected to decline after rising slightly in mid-January as demand for workers remains elevated and a surge in Covid-19 cases from the Omicron variant eases.
Economists surveyed by The Wall Street Journal expect the Labor Department to report that initial jobless claims dropped to 245,000 in the week ended Jan. 29, from 260,000 the prior week.
Jobless claims reached pre-pandemic lows in November after surging to more than 6 million at the onset of the pandemic in early 2020. Claims fell to their lowest level since 1969 in December as businesses held on to more workers in the face of a persistent labor shortage.
The Labor Department will release weekly claims figures on Thursday at 8:30 a.m. ET.
Economists say low totals for jobless claims are an indication that the demand for labor remains strong. That could be a reassuring signal in advance of January’s employment report, which is expected to show job gains slowed or fell because of Omicron-induced disruptions last month.
Economists in The Wall Street Journal survey expect employers added 150,000 jobs in January, though several also expect that payrolls fell last month. That would represent a sharp drop from the 537,000 monthly average job growth last year.
“If we see initial claims fall, that would be an indication that the hit to the economy and the labor market in particular from the Omicron wave is fading,” said Gus Faucher, chief economist at the PNC Financial Services Group. He expects initial claims numbers will continue to drift down over the next month or two.
Mr. Faucher has forecast a decline of 400,000 jobs in January. But he sees the labor market bouncing back relatively quickly once Covid-19 case numbers come down further.
“The demand for labor is still very strong,” he said.
Michael Pearce, senior economist at Capital Economics, said he expected weak payrolls performance would be made up quickly in the coming months.
Other economic indicators point to a healthy labor market in which jobs are plentiful and employers are struggling to lure workers, he said.
There were 10.9 million job openings in December up from 10.8 million November, according to Labor Department data released earlier this week. Layoffs and discharges fell to a record low of 1.2 million and there were 4.3 million quits in December, the report showed.
“It’s still workers quitting in record numbers and firms holding on to everyone else they’ve got,” Mr. Pearce said. That is consistent with low numbers of initial jobless claims, he said.
A separate Labor Department report showed that the tight labor market has been pushing up employee wages.
Wage and benefits costs were up 4% in the fourth quarter of 2021 compared with the same period the previous year, the report said.
On Jan. 26, Federal Reserve Chairman Jerome Powell said the labor market had fully recovered from the pandemic and was now firing on all cylinders. That should prompt Fed officials to move to raise interest rates soon, perhaps as early as March, he said.
Write to David Harrison at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
