The numbers: New applications for unemployment benefits sank to a 52-year low of 184,000 in the week after the Thanksgiving holiday, reflecting great reluctance by companies to lay off workers amid the biggest labor shortage in decades.
New filings tumbled by 43,000 in the seven days ended Dec. 4 from a revised 227,000 in the prior week, the Labor Department said Thursday.
Yet the surprisingly big decline — new claims hit the lowest level since September 1969 — stemmed largely from holiday-related quirks and is somewhat exaggerated.
The raw or actual number of new claims, for instance, jumped to 280,665 in early December from 216,985 two weeks ago.
Why the discrepancy? The government’s method of adjusting jobless claims for changes in seasonal employment patterns often produces big swings from Thanksgiving through January.
Companies add lots of temporary workers in the last few months of the year and then let them go after Christmas.
What’s more, the pandemic has further skewed the government’s process for seasonal adjustments. That’s what appears to have happened last week.
Big picture: By any measure the number of people applying for jobless benefits is now extremely low and likely to fall even further with the economy growing rapidly. Companies don’t want to lay off any workers unless as a last resort because they might not be able to find replacements. They have a near-record 11 million jobs vacant but not nearly enough people to fill them.
Key details: New jobless claims fell the most in the states of Virginia and North Carolina. They rose the most in California, New York and Texas.
The number of people already collecting state jobless benefits, known as continuing claims, rose by 38,000 to 1.95 million. They are still near pre-pandemic lows, however.
What they are saying? “Seasonal adjustment factors continue to wreak havoc with the data, and the claims figures may remain volatile through the holiday season,” said lead U.S. economist Nancy Van Houten of Oxford Economics.
“Looking past the noise, we think claims will eventually hover more consistently around pre-pandemic levels of 220,000, assuming the omicron variant of the coronavirus has only a moderate negative impact on the economy.”