New jobless claims shoot back up after record-low report

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The number of Americans newly seeking jobless benefits last week shot back up — but remained near pre-pandemic levels — after plummeting to a 52-year low in the prior report ahead of the Thanksgiving holiday, the feds said Thursday.

Initial filings for unemployment benefits, seen as a proxy for layoffs, rose to 222,000, up 28,000 from the prior week’s revised level of 194,000, according to data released Thursday by the Labor Department.

Economists surveyed by Dow Jones expected to see new claims rise even more, to 240,000, after seeing six consecutive weeks of decreases, including a huge drop of 71,000 reported last week.

The rise in new claims restores the weekly numbers to the trend that economists had been expecting to see, despite the shocking drop to below 200,000, the first time the figure has been that low since 1969.

While that plummet — along with the historically high national quit rate and the record number of job openings across the country — suggested a robust recovery in the labor market, it also likely overstated the recovery due to holiday-linked volatility.

“Although the plunge in UI claims was certainly welcome, it does not indicate a dramatic turn in the labor market. Claims are highly volatile, especially around holidays,” PNC chief economist Gus Faucher warned last week.

Man works on an assembly line.
Economists expected to see new claims rise after seeing six consecutive weeks of decreases.
Mandel Ngan/AFP via Getty Images
A graph showing the seasonally adjusted jobless claims.
A graph showing the seasonally adjusted jobless claims.

Despite the recent volatility, weekly new claims have fallen substantially from the 2020 peak of about 6.1 million new claims in a single week, and are still steadily falling toward pre-pandemic levels.

Thursday’s report also showed that continuing claims fell by 107,000 from the prior week’s revised level, according to the new data. That figure stood at almost 6 million at the same time last year, in the thick of the pandemic.

For the first time since the pandemic started, under 2 million Americans remain on traditional state unemployment benefits, the feds added.

Office buildings.
The recent drops in jobless claims likely overstated the economic recovery due to holiday-linked volatility.
Jeff Bundy/Omaha World-Herald via AP

There are other signs the labor market is mounting a strong recovery. Last month, the Labor Department reported that Americans quit their jobs in September at a record clip and nationwide job openings remained just shy of its record.

And companies managed to add 531,000 jobs in October — the biggest monthly gain in three months — and the unemployment rate fell to 4.6 percent from 4.8 percent a month earlier, the Labor Department reported last month.

The feds will provide an updated jobs report for November, which is sure to be closely watched, on Friday.

"Now Hiring" signs for jobs stand along a road.
Companies managed to add 531,000 jobs in October, the most in three months.
Brian Snyder/REUTERS

The economy, however, is still missing more than 4 million jobs compared with just before the pandemic. Last month, analysts at Goldman Sachs estimated that some 2.5 million of those missing jobs are due to retirements, including 1.5 million early retirements.

And the emerging threat of the Omicron variant of the coronavirus could also throw a wrench in the recovery of the labor market if it leads to major economic disruptions.

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