U.S. weekly jobless claims increase moderately

The number of Americans filing new claims for unemployment benefits rose last week and could increase further in the coming weeks amid disruptions from soaring COVID-19 infections.

Initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 207,000 for the week ended Jan. 1, the Labor Department said on Thursday. Claims dropped to 200,000 in the prior week.

Economists polled by Reuters had forecast 197,000 applications for the latest week. Applications typically increase during the holiday season, but an acute shortage of workers has disrupted that seasonal pattern, resulting in lower seasonally adjusted claims numbers in recent weeks. There were 10.6 million job openings at the end of November.

“Some businesses temporarily close around the holiday season, causing an increase in filings for unemployment benefits,” Veronica Clark, an economist at Citigroup in New York. “As worker shortages have been a persistent issue and employment levels are already lower than desired, this effect has been much less during the recent holiday season.”

Stripping out the weekly volatility, the labor market is tightening, with claims having declined from a record high of 6.149 million in early April 2020.

Minutes of the Federal Reserve’s Dec. 14-15 policy meeting published on Wednesday showed Fed officials viewed the labor market as “very tight.” The U.S. central bank might need to raise interest rates sooner than expected and begin reducing its overall asset holdings to tame high inflation, according to the minutes.

But with the United States reporting nearly 1 million new coronavirus infections on Monday, the highest daily tally of any country in the world, a temporary rise in claims is likely.