Finance

Weekly jobless claims rise to 286K amid omicron surge

New applications for jobless benefits rose sharply last week amid surging cases of COVID-19, according to data released Thursday by the Labor Department.

In the week ending Jan. 15, seasonally adjusted initial claims for unemployment insurance rose to 286,000, a gain of 55,000 from the previous week’s revised level of 231,000. The four-week moving average of new claims also rose to 231,000 after several weeks of rising applications.

The steep rise in claims raises concerns about the economic impact of the omicron variant, which has weighed on the economy through much of the winter. Economists say persistent staffing troubles, declines in face-to-face consumer activity and school closures could wipe out much of the quarter’s growth and job gains.

“Weekly unemployment claims jumped 55,000 in the most recent week, and even with the usual noise in the numbers they seem to r eflect the record rise in COVID-19 cases from Omicron,” Robert Frick, corporate economist at Navy Federal Credit Union, said in a statement.

“Fortunately Omicron is peaking and if past patterns hold, claims should drop quickly in the next two to three weeks.”

Even so, the toll of omicron may have already derailed the January jobs report. The two surveys used by the Labor Department to calculate monthly jobs gains took place as claims surged last week, which does not bode well for January employment growth.

Claims had already been rising ahead of last week as a resilient labor market finally buckled beneath the omicron surge. Weekly claims had lingered below pre-pandemic levels and hit a nearly 60-year low before the new variant appeared to spur a spike in layoffs.

“From a medium term perspective, we worry that the rise in unemployment claims drains momentum from the labor force participation recovery,” said John Leer, chief economist at Morning Consult.

“Why should people look for work when people with jobs are being laid off?”

–Updated at 9:09 a.m.

Finance