Jobless claims sink to 184,000 and hit lowest stage since 1969 – however there is a massive catch
The payment: New jobless claims fell to a 52-year low of 184,000 in the week after Thanksgiving, reflecting the reluctance of companies to lay off workers during the biggest labor shortage in decades.
New registrations fell by 43,000 in the seven days up to December 4, compared to 227,000 in the previous week, the Ministry of Labor said on Thursday.
But the surprisingly sharp decline – new applications reached their lowest level since September 1969 – was largely due to holiday-related quirks and is a little exaggerated.
For example, the raw or actual number of new applications rose from 216,985 two weeks ago to 280,665 in early December.
Why the big discrepancy? The government’s method of adjusting jobless claims for changes in seasonal employment patterns often fluctuates widely from Thanksgiving to January.
Companies hire a lot of temporary workers in the last few months of the year and fire them after Christmas.
In addition, the pandemic has further distorted the government’s process of seasonal adjustment. That seems to have happened last week.
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Big picture: The number of people who have applied for benefits remains extremely low and is likely to decline further as the economy grows rapidly.
Companies don’t want to lay off workers unless it is a last resort because they may not find replacements. They have a nearly record-breaking 11 million jobs, but not nearly enough people to fill them.
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Key data: The states of Virginia and North Carolina saw the greatest decline in new jobless claims. They rose the most in California, New York, and Texas.
The number of people who already receive state unemployment benefits, so-called permanent applications, rose by 38,000 to 1.95 million. However, they are still near pre-pandemic lows.
What do you say? “Seasonally adjusted factors can continue to devastate the data, and claims numbers can remain volatile over the holiday season,” said Nancy Van Houten, senior US economist, Oxford Economics.
“With regard to noise, we assume that claims will ultimately be more constant around the pre-pandemic 220,000 level, provided that the Omicron variant of the coronavirus has only a moderate negative impact on the economy.”
Market reaction: The Dow Jones Industrial Average DJIA, + 0.10% and the S&P 500 SPX, + 0.31% should open a little lower in Thursday’s trades.