Us economy: job cuts, COVID 19 cases soar

Us economy: job cuts, COVID 19 cases soar

WASHINGTON Reuters - The number of Americans filing new claims for unemployment benefits went up last week and could increase further in the coming weeks due to the soaring COVID 19 infections.

For the week ending January 1, the Labor Department said that initial claims for unemployment benefits increased 7,000 to a seasonally adjusted 207,000. In the past week, claims dropped to 200,000.

Economists polled by Reuters had predicted 197,000 applications for the latest week. Applications typically increase during the holiday season, but an acute shortage of workers has disrupted that seasonal pattern, resulting in lower seasonally adjusted claims numbers in recent weeks. There were 10.6 million job openings at the end of November.

Some businesses temporarily close around the holiday season cause an increase in filings for unemployment benefits, according to Veronica Clark, an economist at Citigroup in New York. This effect has been less during the recent holiday season because of the fact that worker shortages have been a persistent issue and employment levels are already lower than desired. The labor market is tighter, with claims slipping from a record high of 6.149 million in early April 2020.

Minutes of the Federal Reserve's Dec. 14 -- 15 policy meeting on Wednesday showed Fed officials viewed the labor market as very tight. The minutes indicate that the U.S. central bank might have to raise interest rates sooner than expected and reduce its overall asset holdings to tame high inflation.

A temporary rise in claims is likely due to the United States reporting nearly 1 million new coronaviruses on Monday, the highest daily daily tally of any country in the world.

Some school districts are suspending in-person learning, which could force some working parents to assume childcare duties. Some businesses are temporarily closing or scaling back services due to workers calling in sick.

A separate report released on Thursday by global outplacement firm Challenger shows job cuts announced by U.S. employers increased 28.1% to 19,052 in December. There were 321,970 jobs left in 2021, which is low, according to layoffs. The labor market will be affected regardless of how severe illnesses are, because of the sheer number of COVID cases, he said.

Gray Christmas, senior vice president Andrew Challenger. Those with COVID safety concerns will continue to shun in-person roles. The Labor Department's closely watched employment report for December, due to be released on Friday, does not have any bearing on the claims data, as it falls outside the survey period. The government surveyed businesses and households for the employment report last month in mid-December.

Non-farm payrolls were expected to increase by 400,000 jobs in December, a rise of 210,000 in November, according to a survey of economists. The unemployment rate is projected to fall to 4.1% from 4.2% in November.

The ADP National employment report showed private payrolls increased by 807,00 jobs last month, boosted the prospects of a strong employment report. The December payrolls estimate was raised by 50,000 to 500,000, according to economists at Goldman Sachs.

A measure of manufacturing employment rose to an eight-month high in December, according to a survey from the Institute for Supply Management on Tuesday.