After Rising for Three Straight Weeks

• Initial claims for unemployment insurance fell to 260,00 in the week ending January 22 from the upwardly revised 290,000 in the previous week.
• The insured unemployment rate was steady at 1.2% for the week ending January 15.
• Continuing claims rose to 1.675 million in the week ending January 15 from 1.624 million in the prior week.
• Labor market conditions are very strong; PNC expects job growth to average 300,000 per month over the course of 2022.

Initial claims for unemployment insurance fell to 260,000 in the week ending January 22, 2022, down from an upwardly revised 290,000 in the previous week. This was the first decline in four weeks. The four-week moving average of claims, which smooths some of the week-to-week volatility, edged up to 247,000 from 232,000.

The insured unemployment rate was steady at 1.2% for the week ending January 15; this is the share of workers covered by state unemployment insurance programs who are currently claiming benefits. For comparison, the insured unemployment rate was 1.4% for most of the time from early 2017 through early 2018, a period when the unemployment rate from the Bureau of Labor ranged from around four to four-and-a-half percent. 

Initial claims jumped from 200,000 per week in early 2020 to more than 6 million in early April 2020 as the pandemic came to the U.S. They have fallen quickly as labor market dynamics have substantially improved; initial claims averaged 201,200 in December 2021, 10.7% lower than the 225,250 average in December 2019. 

The total number of people receiving benefits under regular state unemployment insurance programs (continued claims) rose by 51,000 during the week ending January 15 to 1.675 million; claims for the previous week were revised down by 11,000 to 1.624 million, from 1.635 million. The four-week moving average of continued claims fell to 1.652 million, from 1.663 million. The four-week moving average of continued claims has fallen every week but once since late May as unemployed workers leave the rolls, either because their benefits have expired or because they have quickly found a new job. 

Initial claims rose higher earlier this month as the Omicron wave weighed on economic activity. The economic hit from the wave will likely result in weak job growth in January, but it shouldn’t change the economic trajectory this year. Labor market conditions are very strong; the unemployment rate has declined substantially; initial and continuing claims have declined rapidly from their record highs in 2020; and wage growth has been solid. 

Job openings as measured by the Job Openings and Labor Turnover Survey (JOLTS) are near record highs. In a conference call with reporters following the conclusion of the Federal Open Market Committee (FOMC) meeting on January 26, Chair Powell noted that “most FOMC participants agree that labor market conditions are consistent with maximum employment in the sense of the highest level of employment that is consistent with price stability.” The biggest concern in the labor market today is the delayed recovery of the labor force. The labor force is gradually increasing and should improve moderately this year although it is possible that the pandemic has structurally changed the composition and size of the labor force.

The PNC Financial Services Group, Inc. is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking including a full range of lending products; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. For information about PNC, visit www.pnc.com.