Jobless Claims Show Incremental Improvement

(Chart courtesy U.S. Department of Labor.)

Initial claims for unemployment insurance fell to 847,000 for the week ending Jan. 23, the Labor Department reported yesterday, a reminder that numbers will continue to remain elevated until a comprehensive pandemic response takes hold.

The advance figure for seasonally adjusted initial claims represented a decrease of 67,000 from the previous week’s revised level. The four-week moving average rose to 868,000, an increase of 16,250 from the previous week’s revised average.

The advance seasonally adjusted insured unemployment rate dropped slightly to 3.4 percent for the week ending January 16, a decrease of 0.1 percentage point from the previous week’s revised rate. The previous week’s rate was revised down by 0.1 from 3.6 to 3.5 percent. The advance number for seasonally adjusted insured unemployment during the week ending January 16—also known as continuing claims—fell to 4,771,000, a decrease of 203,000 from the previous week’s revised level. The four-week moving average fell to 4,998,000, a decrease of 106,750 from the previous week’s revised average.

“While any improvement is welcome, the declines in joblessness will only be incremental until the virus is defeated,” said Sarah House, Senior Economist with Wells Fargo Securities, Charlotte, N.C. “The bad news is that even after that decline, 847,000 people are still freshly out of work. This is an improvement in the sense that the numbers are down, but it is still a number that would have set an all-time record before this pandemic began. The virus is still the driving force behind labor market dynamics, but the beginning of a downtrend in recent figures in terms of new COVID case-counts is an encouraging development.”

House noted continuing claims showed improvement as well. These figures lag the first-time claims numbers by one week, but the number of people still receiving unemployment benefits has fallen in each of the past two weeks. The total figure is now under five million,” she said. “Continuing claims figures tend to move in the same direction as the broader economy. The fact that the labor market shed jobs in December as the pandemic worsened was a precursor to a slightly weaker-than-expected GDP report for the fourth quarter. We do not look for the labor market to improve meaningfully until vaccine distribution ramps up in earnest and until the spread of the virus is sharply curtailed.”