There are more than five-decade lows for weekly jobless claims, which are expected to go up next week. New claims are poised to come in near their pre-pandemic levels, highlighting ongoing improvements in the labor market.
The Labor Department is going to release its weekly jobless claims report on Thursday. Here are the main metrics expected from the print, compared to consensus estimates compiled by Bloomberg:
The jobless claims are expected to increase for the first time in eight weeks, according to the consensus economists. Last week's 199,000 jobless claims, which brought new claims well below the pre-pandemic 2019 weekly average of around 220,000, were seen by many pundits as a one-time event.
Rubeela Farooqi, chief economist for High Frequency Economics, wrote last week's drop to 199 K is likely overstated strength due to holiday-related seasonal adjustment issues. Demand for labor remains strong despite a worker shortage. The labor market has been weighed down by worker shortages for a long time. The civilian labor force was down by nearly 3 million participants as of October compared to February 2020 levels, according to Labor Department data. Many working-age individuals have been on the sideline because of concerns over the virus and a desire to seek out new roles with better flexibility, wages and benefits because of the desire to stay on the sidelines.
Greg Staples, DWS Group's head of fixed income, Americas, said that the timeline for the labor market to reach stability and return to pre-pandemic conditions is the real wildcard for the economic recovery.
There's a lot of question as to what it will take to bring back workers into the workforce. Staples said there was hesitation whether it was because they've got built up savings or they're worried about child care or because they're worried about COVID. It will entice workers back in, as employers have to raise wages above say $15 an hour level, and that will cause a more natural balance between employers and employees. Some of the inflation pressures will be gone and wages will stabilize. The Labor Department's next monthly jobs report for November will provide more details about labor market recovery, labor force participation and wage growth. Non-farm payrolls increased by 545,000 in November, compared to October's 531,000 gain. The unemployment rate went down to 4.5%, while the average hourly earnings rose by 5.0% over the last year to accelerate from October's 4.9% year-on-year rise.
The survey period for the report took place during the week, including the 12th of the month. The survey period coincided with a drop in weekly jobless claims to below 200,000, which is a potentially encouraging sign for the monthly data.
Emily McCormick is a reporter for Yahoo Finance. The Labor Department is going to release its November jobs report Friday at 8: 30 a.m.