The number of Americans applying for unemployment benefits climbed slightly last week but still remains historically low and consistent with a tight United States labour market.
Jobless claims – a proxy for layoffs – increased by 18,000 to 206,000 the week ended December 11, according to the US Department of Labor. The four-week average, which smooths out some of the volatility, fell by 16,000 to less than 204,000, the lowest level since mid-November 1969.
Demand for labour is the strongest it’s been in decades as the US economy continues to rebound from last year’s coronavirus pandemic blow. While the unemployment rate has yet to fall to pre-pandemic levels, workers have dropped out of the labour force in droves. Some have opted to take early retirement or open their own business, while others are staying on the sidelines due to fear of contracting COVID-19, or a lack of childcare.
The acute shortage of workers has made layoffs rare.
The total number of Americans collecting unemployment benefits was 1.8 million for the week ending December 4 – 154,000 less compared to the previous week.
For most of this year, the US Federal Reserve has maintained easy money policies to help get Americans back to work. But with job openings hovering near all-time highs and inflation soaring, the Fed is speeding up its withdrawal of stimulus to help keep a lid on rising prices.
Projections released by the Fed on Wednesday are calling for three interest-rate hikes next year.
Weekly job claims have fallen most of 2021 since hitting 900,000 in early January and are now below the 220,000-a-week level seen before the COVID-19 crisis battered the US economy.
March and April of 2020 saw employers shed a whopping 22.4 million jobs.
That was at the height of the pandemic pandemonium, when governments implemented stay-at-home orders and businesses shuttered.
The US government then pumped money into the economy, doling out generous federal government-funded unemployment benefits, which ended in early September, and other pandemic aid.
Flush with savings, Americans started unleashing pent-up demand as virus restrictions were rolled back. Shortages of workers, as well as supply-chain bottlenecks and scarce raw materials, have raised costs for businesses, which in turn have passed on at least a portion to consumers by charging higher prices.
In November, producer prices shattered records while consumer prices saw their biggest annual jump in nearly 40 years.
But COVID-19 continues to loom over the nation’s economic recovery. The latest strain – Omicron, which made headlines in the US during Thanksgiving Day weekend in late November – sent equity markets tumbling, brought back travel restrictions and has caused a roller coaster of worry. Some universities have moved classes back online, travel sites have noted that people are cancelling holiday travel plans, and some businesses have asked their employees to start working remotely again.