Jobless claims up 23K in first week of January

New weekly claims for jobless benefits jumped by 23,000 during the first full week of January, according to data released Thursday by the Labor Department. 

In the week ending Jan. 8, seasonally adjusted initial claims for unemployment insurance rose to 230,000, up from the previous week’s revised level of 207,000. The four-week moving average of claims rose to 210,750, an increase of 6,250 from the previous week’s unrevised average of 204,500. 

While jobless claims remain near pre-pandemic levels, the sharp increase in applications comes amid concern about the potential economic impact of the omicron variant of COVID-19. Surging cases have pushed many schools back into remote learning and prompted some restaurants and bars to scale back in-person service.

The labor market appeared to hold strong as the omicron variant began spreading through the U.S. in December. Jobless claims remained below pre-pandemic levels for most of the end of year, even as job growth in November and December fell short of expectations. Even so, the December jobs report captured little of the omicron surge, which accelerated in the second half of the month.

“The rise in claims likely reflects an increase in layoffs due to the surge in Covid cases, as seasonal adjustment factors last week worked in favor of a lower headline claims figure,” wrote Nancy Vanden Houten of Oxford Economics.

“Claims may remain elevated in the near term, but we expect initial claims will gravitate back to the 200k level once the Omicron wave passes. Encouragingly, there are indications that cases from the Omicron variant are peaking.”

Updated at 10:10 a.m.