US Jobless Claims Spike to 286,000, Highest Since October

People walk by a Help Wanted sign in the Queens borough of New York City on June 04, 2021 in New York City. The U.S. economy added 559,000 jobs in May, bringing the unemployment rate down to 5.8 percent from 6.1 percent / Getty Images
January 20, 2022

WASHINGTON (Reuters)—The number of Americans filing new claims for unemployment benefits unexpectedly rose last week, likely as a winter wave of COVID-19 infections disrupted business activity, which could constrain job growth this month.

Initial claims for state unemployment benefits increased to a seasonally adjusted 286,000 for the week ended Jan. 15 from 231,000 in the prior week, the Labor Department said on Thursday. Economists polled by Reuters had forecast 220,000 applications for the latest week.

The United States is reporting an average of 732,245 new coronavirus infections a day, according to a Reuters analysis of official data, in a winter surge driven by the Omicron variant. There are, however, signs that cases are starting to subside in some regions, including hard-hit New York.

Economists expect claims will start trending lower as infections decline. Claims have plunged from a record high of 6.149 million in early April 2020. Still, labor market conditions are tightening.

Employers are desperate for workers, with 10.6 million job openings at the end of November. The unemployment rate is at a 22-month low of 3.9%, an indication that the labor market is at or close to maximum employment.

The claims data covered the period during which the government surveyed businesses for the nonfarm payrolls component of January's employment report. Claims are higher than their level in mid-December.

Worker shortages and the disruptions caused by Omicron through absenteeisms, reduced operations or temporary business closures, could result in payrolls gains remaining moderate this month. The economy added 199,000 jobs in December, the fewest in a year. The workforce is about 2.2 million people smaller than before the pandemic.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)