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First Cut: Initial jobless claims in week ended Dec. 29 highest since the summer

Initial jobless claims for the week ended December 29 were up 10,000 to 231,000 after a revised 221,000 in the prior week (previously 216,000). It is not unusual for claims to turn higher at year-end as businesses adjust payrolls. However, the rise was larger than expected in market surveys. It should not prove too disturbing in light of the numbers from the ADP National Employment Report and Challenger Report on Layoffs. Seasonal adjustment is difficult in the weeks of the winter holiday and into the new year as businesses shed holiday workforces.

Two states estimated claims in the December 29 week – California and Virginia.  It is likely that at least part of the week’s increase reflects claims by educational service workers laid off during the holiday period.

Continuing claims were up 32,000 in the December 22 week to 1.740 million, the highest since 1.760 million in the July 28 week. The increase is probably in part due to workers remaining on the rolls after the wildfires in California. The level may remain a bit more elevated in the coming weeks until recovery efforts allow businesses to reopen, although some will have closed permanently.

The insured rate of unemployment remained at 1.2% for a fifth week in a row, off record lows but still consistent with a tight labor market.

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