JANUARY 24, 2022 – JOBLESS CLAIMS RISE BUT FUNDAMENTALS REMAIN UNCHANGED
New jobless claims last week were up to their highest level since October 2021 at 286,000, up 55,000 from the previous week. The surge of Covid is disrupting businesses, but the fundamentals of the labor market have not changed. There remains a huge demand for workers, and it is hoped those who have been sitting out will soon return to the ranks of the employed.
Reduced savings and rising household debt should bring workers back as government Covid-support measures have wound down. Persistent inflation, at rates not seen for decades, should further entice people back to work. A speedy recovery has reinstated 85 percent of the jobs lost during the first wave of the virus. An added benefit is wages have risen, in part due to the mismatch between labor supply and demand.
January is known for job market volatility due to seasonal hiring changes. The data is likely an anomaly and will not cause a rethinking of monetary policy.