New Jobless Claims Unexpectedly Climb to 230,000

Initial unemployment claims for the week ending Jan. 8 unexpectedly increased to 230,000, the most since the middle of November but still below pandemic averages, according to the latest report from the Bureau of Labor Statistics on Thursday (Jan. 13). It’s the second week in a row that claims are up.

Claims increased 23,000 over the previous week’s unrevised level of 207,000. The total number of continued weeks claimed for benefits in all programs for the week ending Dec. 25 was 1.95 million, up 226,264 from the previous week. There were 19.4 weekly claims filed for benefits in all programs during the same time period in 2020.

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Continuing claims for state benefits fell by almost 200,000 to 1.6 million in the week ended Jan. 1. During the week ending Dec. 25, Extended Benefits were available in Connecticut, New Jersey, and New Mexico.

Economists surveyed by The Wall Street Journal and Bloomberg had estimated jobless claims, a proxy for layoffs would dip to 200,000. The increase was likely caused in part due to employers dealing with workers calling in sick because of Covid-19 and the omicron variant, or due to layoffs relating to the new variant.

“We are talking about absenteeism to a level where some businesses might not be able to operate — if you want to call absenteeism the new lockdown,” Rubeela Farooqi, chief U.S. economist of High Frequency Economics, told the WSJ.

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The new virus strain has triggered record-high increases in hospitalizations along with forecasts by economists of a short-term slowdown in economic recovery.

“The spike in the number of Covid cases is forcing temporary business closures, which likely pushed some affected workers to apply for jobless benefits,” Bloomberg economist Eliza Winger said prior to the data being released. “Most businesses are open, albeit operating at limited capacity.”

In 2019, new weekly claims averaged 220,000. In early December 2020, weekly claims dropped below 190,000, the lowest level since 1969, Yahoo Finance reported.

“The underlying trend is still falling; we expect new lows at the end of the month,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, told Yahoo Finance.