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New weekly jobless claims unexpectedly rose last week, ending a three-week streak of improvements.
The Labor Department released its latest weekly jobless claims report Thursday at 8:30 a.m. ET. Here were the main metrics from the print compared to consensus estimates compiled by Bloomberg:
Initial jobless claims, week ended Feb. 12: 248,000 vs. 218,000 expected and a revised 225,000 during prior week
Continuing claims, week ended Feb. 5: 1.593 million vs. 1.605 million expected, and a revised 1.619 million during prior week
Even with the rise in filings last week, jobless claims hovered near pre-pandemic levels, given that 2019’s weekly average of new claims was approximately 220,000. In February last year, jobless claims were still coming in at a weekly rate of about 800,000 as virus-related pressures weighed on the labor market.
Initial jobless claims edged higher in January to near 300,000 around the time that Omicron cases surged to a record level in the U.S. Though the virus-induced impact appeared as a brief bump higher in the weekly jobless claims data, the latest monthly jobs report showed surprising resilience. Non-farm payrolls soaring by a much greater-than-expected 467,000 in January while the labor force participation rate rose more than expected.
“The Omicron wave triggered a brief but startling spike in initial jobless claims, but payroll growth slowed only marginally in January, and the initial data for February from Homebase point to a rebound,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in a note. “At the same time, we are becoming increasingly convinced that the long-awaited rebound in labor participation is now underway, especially among women, who left the labor force in disproportionate numbers when schools and child care were closed.”
“Participation is unlikely to return to its pre-COVID level, thanks in part to early retirement among older people, who have seen big increases in the value of their homes and other assets, but we hope it will rise far enough to ease the pressure on wage growth,” he added.
This week’s jobless claims data also coincides with the survey week for the February jobs report, serving as an advanced indicator of the strength of the labor market heading into that print.
But while labor market data remain an important signal of the health of the broader economy, for policymakers, these reports have been overshadowed by the decades-high prints on inflation emerging as of late. With consumer prices soaring at the fastest rate in four decades, Federal Open Market Committee (FOMC) members have now appeared to shift their focus to bringing down inflation rather than further stoking the labor market, which has already shown significant progress in bringing many back to work and providing ample opportunities for workers to switch jobs.
“At the January meeting, the FOMC strongly signaled conditions were ripe for rate hikes starting in March by stressing the risks of persistent, above target inflation and the progress made in the labor market,” Sam Bullard, managing director and senior economist at Wells Fargo Corporate and Investment Banking, wrote in a note. “For now, we continue to think the most likely outcome is that the Fed will act in a ‘measured’ way, with 25 bps hikes.”
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