After hitting a pandemic low last week, unemployment insurance claims increased slightly last week, up 18,000 to hit 206,000. The 4-week moving average, which serves as a better overall picture of volatility, decreased 16,000 from the previous week’s revised average to its lowest level since Nov. 15, 1969.
Jobless claims have been overall on the decline in recent weeks, a sign of recovery for a struggling economy post-pandemic.
Last week though, jobless claims hit well above the 195,000 analyst estimate CNBC reports.
While the slight increase is concerning, they are still well below pandemic highs. Weekly claims peaked at 6.15 million in April 2020 when the pandemic began taking its toll on the economy. Claims then remained above 300,000 before eventually leveling off in October.
This news comes a day after the Federal Reserve announced it will accelerate its monthly bond purchasing, opening the door for aggressive rate hikes sooner than expected.
“Economic developments and changes in the outlook warrant this evolution of monetary policy, which will continue to provide appropriate support for the economy,” Chairman Jerome Powell said in a post-meeting news conference.
A post-meeting statement also stated unemployment rate projections for the whole of 2021 to come down to 4.3%, down from 4.8% in September. The statement also stated that “job gains have been solid in recent months, and the unemployment rate has declined substantially.”
This is confounding news given the slight increase in jobless claims. The record of jobless claims measures how many newly unemployed and continually unemployed persons re-filing claims. Another metric, the labor force participation rate, better explains why the two don’t sync up.
The labor force participation rate’s last measure was 61.8% in November — a depressed number considering February 2020’s 63.3% when the number of workers had decreased by 2.4 million. What this could indicate is that the jobless claims number shows an improvement in the number of layoffs, meaning that employers are doing a better job of retaining their workers but not necessarily bringing in new ones.
Labor markets still remain historically tight, with low labor participation rates given the surge in available positions.
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