US weekly jobless claims rise moderately as labour market tightens

[WASHINGTON] The number of Americans filing new claims for unemployment benefits increased moderately last week, remaining at levels consistent with tightening labour market conditions.

Initial claims for state unemployment benefits rose 18,000 to a seasonally adjusted 206,000 for the week ended Dec 11, the Labor Department said on Thursday (Dec 16). Claims dropped to 188,000 in the prior week.

Economists polled by Reuters had forecast 200,000 applications for the latest week. Claims have declined from a record high of 6.149 million in early April of 2020.

Applications typically increase around the holiday season as companies temporarily close, but an acute shortage of workers has disrupted that seasonal pattern, resulting in large declines in the seasonally adjusted claims numbers in recent weeks.

Aside from the year-end volatility in claims, the labour market is strengthening. The Federal Reserve acknowledged this on Wednesday when it announced that would end its pandemic-era bond purchases in March and pave the way for 3 quarter-percentage-point interest rate increases by the end of 2022. Fed chair Jerome Powell told reporters the economy was "making rapid progress toward maximum employment".

There were a record 11 million job openings at the end of October. The unemployment rate fell to a 21-month low of 4.2 per cent in November. There are signs that the labour market crunch is starting to ease.

Indeed Hiring Lab's job search survey on Wednesday showed the share of the population actively looking for paid work rose 2 percentage points to 29.1 per cent in November from the prior month.

The rise reflected a jump among the unemployed to the highest level since the survey started in June. But rising Covid-19 infections and the Omicron variant of the coronavirus could discourage some people from looking for work.

Millions of unemployed Americans have remained home even as generous federal government-funded unemployment benefits ended in early September and schools reopened for in-person learning.

The workforce is 2.4 million below its pre-pandemic level.

REUTERS