Initial claims for unemployment benefits rose for the second consecutive week, continuing the rebound from the lowest levels in over a year hit earlier in January.
The Department of Labor said claims rose to 224,000 last week and revised the prior week’s claims up by 1,000 to 215,000.
Economists had forecast 214,000 claims.
Claims are a proxy for layoffs and have been very low by historical standards. In the five years prior to the pandemic, claims averaged around 250,000. The long-term average going back to 1967 is 365,000. In 2019, claims averaged 217,000.
The yearly average lept to 1.36 million on average in the pandemic year of 2020 when claims spiked from 213,000 in early March to 6.1 million in early April.
Claims averaged 461,000 in 2021 and 213,755 in 2022. Last year, claims averaged 225,228.
Demand for workers remains robust. The number of job openings at the end of December rose to 9 million, the second straight monthly increase following several months of falling vacancies.
The Federal Reserve has said that cooling demand for labor is likely to be necessary to bring inflation down to its two percent target. Many economists thought the Fed’s rate hikes between March of 2022 and July of 2023 would push up unemployment and jobless claims but employers have continued to hire and have not shed many workers during the hiking cycle.
The Department of Labor will report on January’s payroll growth and the unemployment rate on Friday. Economists are forecasting that employers grew their payrolls by 185,000 and that the unemployment rate ticked up to 3.8 percent from 3.7 percent.