US Initial Unemployment Claims Drop To 238,000 As Omicron's Impact Appears To Shrink

Initial unemployment claims for the last week of January surprised on Thursday with just 238,000 new claims being reported, according to the Department of Labor. These numbers were lower than the 245,000 claims forecasted.

This week’s numbers continued along the downward trajectory in initial claims that have been seen since they began rising throughout January. Overall, this week’s numbers were 23,000 lower than the 261,000 that were found in the last report.

What these numbers may also suggest is that the labor market is beginning to shrug off some of the damage left behind by the Omicron variant of COVID-19. After first being detected in November last year, it was feared that Omicron would drive up unemployment numbers because of its higher contagiousness. This appeared to be the case when claims began to mount in January with a peak of 286,000 reported in the week ending Jan. 15.

This report also comes one day after a dour jobs report by the private payroll processor ADP found that the job market bled over 301,000 positions in January after a much stronger showing in December. According to ADP’s chief economist Nela Richardson, these numbers represented a “step back” for the economy but predicted that this was likely a temporary contraction.

On Friday, the Labor Department will release its monthly report on nonfarm payrolls that will provide further insight into the extent of Omicron’s impact. Early signs are pessimistic with the White House already cautioning that the numbers are likely to be skewed lower because of the virus.