US jobless claims drop, showing no Omicron variant hit yet

People line up outside a newly reopened career center for in-person appointments in Louisville, U.S., April 15, 2021. [Reuters]

New claims for US unemployment benefits fell in the week leading up to Christmas and benefits rolls slid to their lowest level of the coronavirus pandemic era the week earlier, the Labour Department said on Thursday, data that showed no impact yet on employment from the rapidly spreading Omicron variant.

Initial claims for State unemployment benefits dropped to a seasonally adjusted 198,000 for the week ended December 25 from a revised 206,000 a week earlier. Early this month claims dropped to a level last seen in 1969.

Economists polled by Reuters had forecast 208,000 applications for the latest week. Claims have declined from a record high of 6.149 million in early April of 2020.

The data were the latest to show that Omicron - the newest and most contagious Covid-19 variant so far - has yet to trip up a tight job market or slow a US economy that appears solidly on track to end the year at a gangbusters growth rate.

While the initial claims data was depressed by so-called seasonal adjustment factors, even the non-seasonally adjusted figures - while roughly 60,000 higher - showed almost no week-over-week change.

"The fact that NSA claims were unchanged suggests that there has been no impact from Omicron as of yet," economists Thomas Simons and Aneta Markowska at Jefferies wrote.

Covid-19 lockdowns

The figures - among the most timely reading on the health of the labour market - also showed the number of people on benefits beyond the first week fell to 1.716 million in the week ended December 18, the lowest since the week of March 7, 2020.

That essentially marks a return to the level that prevailed before the first wave of Covid-19 lockdowns.

"We expect continued claims to come in more consistently around 1.7 million given the low level of initial claims and as more individuals return to work as health conditions improve, although the Omicron variant might slow that process," Nancy Vanden Houten, lead economist at Oxford Economics wrote.

Applications typically increase during the cold weather months, but an acute shortage of workers has disrupted that seasonal pattern, resulting in lower seasonally adjusted claims numbers in recent weeks.

The labour market is tightening, with the unemployment rate at a 21-month low 4.2 per cent as of November.

Employment figures for December will be released on January 7, and estimate among economists polled by Reuters sees the jobless rate edging still lower to 4.1 per cent.

There were a record 11 million job openings at the end of October. Higher wages as companies scramble for scarce workers are helping to underpin consumer spending.