The citizens filing weekly jobless claims decreased more than predicted for the week ended January 29. This shows that an expected slowdown in the job growth last month was only temporary. The weekly jobless claims numbers reported another consecutive decline. This was reported by the Labor Department. The decline has reversed the present surge to a certain extent. The increase had led to the highest numbers in the previous four months in January. The initial jobless claims for state unemployment aid decreased by 23,000 to an adjusted figure of 238,000 for the week ended January 29. The experts had predicted that there would be 245,000 claims for the current week. The weekly jobless claims declined heavily in Illinois, Kentucky, and Ohio. It helped minimize the significant increases in Pennsylvania, Indiana, California, and Michigan.
The jobless claims started to grow from the beginning of the previous month. They reached their maximum point in the middle of January. This was because of a rise in the number of coronavirus infections around the nation due to the Omicron variant. The latest wave impacted business activity in the country, notably the services sector. Another survey by the Institute for Supply Management showed that the non-manufacturing activity index declined to 60 in the previous month. This was the lowest mark since February of the previous year. Any reading above fifty shows that there have been increases in the services sector. The sector is responsible for the majority of the economic activity in the nation. The institute said that the spread of the new variant had disrupted business functions, especially in the reduced staffing levels. The service businesses have also continued to fight against the higher input prices and the erratic supplies of the materials.
The narrowing of labor supply was underscored by the employment report released by ADP. It stated that the private payrolls have decreased in the previous month for the first time this year. This indicates a big chance that the economy decreased jobs in the previous month. According to the Household Pulse Survey released by the US Census Bureau last month, nearly nine million citizens reported not being at work because of pandemic-related reasons during the time of the new year. Citizens who are in quarantine or are out sick and do not get any salary during the survey period are seen as unemployed in the survey of establishments even if they are still employed with their organizations. The stocks on Wall Street were trading lower. The dollar decreased against a basket of currencies. There was an increase in the US Treasury yields. Ryan Sweet, the senior economist at Moody's Analytics, said, "The Omicron COVID-19 variant's grip on the US labor market is loosening, and job growth should reaccelerate."
The Weekly Jobless Claims Show that the Worst is Likely Over
The Federal Government will report in a few days that the nonfarm payrolls have increased by more than a hundred thousand jobs in the previous month after increasing by two hundred thousand in December. This is according to a recent survey of experts. The unemployment rate is expected to remain unchanged at four percent. This underlines the narrowing conditions in the labor market. There were eleven million job openings a few months ago. The workforce is a couple of million people less than before the pandemic. The weekly jobless claims have declined from a high of six million in April of two years ago. The recent disruptions in the labor market are looking like they are over, and the job growth will pick up again.
The country is reporting an average of more than four hundred thousand new coronavirus infections daily. This is a marked decline from the six hundred thousand cases in the previous month. The weekly jobless claims report also showed that the number of citizens getting aid after the first week of benefits declined by nearly fifty thousand to 1.6 million for the week ending January 22. More than two million citizens were getting unemployment aid under all the programs in the previous month. The underlying strength of the Labor market was also underlined by another report. It showed that the job cuts announced by the employers based in the nation held steady in January. The layoffs were down by more than seventy-five percent compared to January of the previous year.
Another report by the Labor Department showed that the nonfarm productivity reversed at an annualized rate of six percent in the previous quarter after falling to a rate of five percent in the third quarter. The experts had said that the productivity would get back at a rate of three percent. The productivity has been quite volatile since the coronavirus pandemic started a couple of years ago. Compared to the last quarter a couple of years ago, productivity has increased at a rate of two percent. The productivity grew by nearly the same percentage points in the previous year. This was a slowdown from the growth of nearly three percent two years ago.
Gus Faucher, the chief economist at PNC Financial, said, "The good news is that the job market should quickly bounce back as the Omicron variant fades. Underlying demand in the economy is still strong, and businesses are still hiring. But the January drop in employment is another reminder that the economy will not fully return to normal until the pandemic is over. The big drop in initial claims over the past two weeks and the ongoing decline in continued claims indicate that the job growth should bounce back in February. The biggest constraint on hiring in the spring of 2022 will be a worker shortage." Jared Bernstein, a member of the Council of Economic Advisers, said, "I think the key point, from our perspective, is the underlying strength of the economy. The underlying strength of the job market is ongoing because, as we have seen, the caseloads are turning over."
Temporary Setback to Labor Market
The private payrolls for the nation declined for the first time in a year in the previous month because of the increasing coronavirus infections that disrupted business functions. This increased the risk of a big decrease in employment that would be a setback for the labor market. The sudden decrease in the payrolls of the National Employment report by ADP was across all business sizes and industries. It was an addition to the slowdown in the manufacturing activity in the previous month. This shows that the economy has lost momentum at the beginning of the year as the coronavirus cases increased across the country. The private payrolls declined by more than three hundred thousand jobs in the previous month. This was the first decline since December of two years. The mark was obtained after an increase of more than seven hundred thousand in December.
The experts had forecasted the private payrolls to grow by more than two hundred thousand jobs. The massive decrease in the private payrolls was mainly because of the hospitality and leisure sector, with more than a hundred and fifty thousand job losses. The utilities, transportation, and trade declined by more than sixty thousand jobs. The manufacturing employment declined by more than twenty thousand jobs. The freezing temperatures in the previous month were also a major factor. The construction sector lost more than nine thousand jobs. Rubeela Faroozi, the chief economist at High Frequency Economics, said, "We see productivity gains remaining positive as output continues to move higher with fewer workers. Adopting new technologies during the pandemic will also likely provide a lift over time. But gains may slow as more and more low-productivity jobs are recovered."
The decline in the weekly jobless claims for the second consecutive week is a good sign for the economy. It also signals that the effects of the coronavirus pandemic may now end in the nation. The Federal Reserve is also going to announce a revision in the interest rates to control inflation. Experts believe that it can indicate the good times to come.