The number of Americans filing new claims for unemployment benefits reportedly dropped more than expected last week in line with declining COVID-19 infections. This is seen as an indication that the expected slowdown in job growth in January may be temporary.
The second consecutive weekly decline reported by the Department of Labor on Thursday partially canceled out the recent surge, which has pushed early claims to a three-month high in mid-January.
According to Ryan Sweet, a senior economist at Moody's, "The spread of the Omicron Covid-19 variant is declining and this will drive job growth."
Preliminary claims for unemployment benefits fell 23,000 to 238,000 for the week ended Jan. 29. Economists surveyed by Reuters even forecast readings to 245,000 applications for the latest week.
Previously unemployment claims rose in early January until the middle of the month following a Covid-19 infection driven by the Omicron variant. Business activities are among those affected as a result of this.
The ADP National Employment Report on Wednesday showed the private wage list declined in January for the first time in a year, increasing the economic likelihood of losing jobs last month.
The market is now focused on the NFP data to be released tomorrow with the expectation that the NFP will increase by 150,000 jobs for January. The unemployment rate is forecast to remain unchanged at 3.9%, underscoring increasingly tight labor market conditions.
