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Jobless claims unexpectedly rise to 248K in latest report

The number of Americans filing new claims for jobless benefits unexpectedly rose last week, but remained at levels associated with tightening labor market conditions. Initial claims for state unemployment benefits increased 23,000 to a seasonally adjusted 248,000 for the week ended Feb. 12, the Labor Department said on Thursday. Economists polled by Reuters had forecast 219,000 applications for the latest week. Claims had been declining since hitting a three-month high in mid-January as coronavirus cases, fueled by the Omicron variant, raged across the country. The United States is reporting an average of 145,769 new COVID-19 infections a day, sharply down from the more than 700,000 in mid-January, according to a Reuters analysis of official data. There is an acute shortage of workers, with a near record 10.9 million job openings at the end of December. This has left employers holding on to their workers, driving claims below their pre-pandemic levels. Claims have plunged from a record high of 6.149 million in early April 2020. “While some level of labor market churn should continue in the near term, we would not be surprised to see claims fall even further below pre-pandemic levels in the coming months,” said Veronica Clark, an economist at Citigroup in New York. “This would reflect an overall low level of layoffs as businesses struggle to reach desired levels of employment in the first place.” Last week’s data covered the period during which the government surveyed business establishments for the nonfarm payrolls portion of February’s employment report. Claims are significantly below their 290,000 level in mid-January. The economy created 467,000 jobs in January. The labor market is tightening, generating strong wage growth, that is contributing to high inflation. Minutes of the Federal Reserve’s Jan. 25-26 meeting published on Wednesday showed “many” officials at the U.S. central bank “viewed labor market conditions as already at or very close to those consistent with maximum employment.” The Fed is expected to start raising interest rates in March to quell inflation, with economists anticipating as much as seven hikes this year.

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