Weekly applications for unemployment benefits in the US unexpectedly increase

WASHINGTON, Jan 12 (Reuters) – The number of Americans filing new claims for jobless benefits grew unexpectedly in the first week of January amid a surge in COVID-19 infections, but remained at a level consistent with tight labor market conditions.

Initial claims for state jobless benefits rose by 23,000 to a seasonally adjusted 230,000 in the week ending Jan. 8, the Labor Department reported Thursday. Economists polled by Reuters had expected them to fall to 200,000 claims in the latest week.

Orders remain below their pre-pandemic level, a sign of strengthening labor market conditions. They are down from the all-time high of 6.149 million in early April 2020.

Claims for jobless benefits remain rock-bottom despite a surge in coronavirus cases, fueled by the omicron variant, which has disrupted activity from airlines to schools as workers call in sick. Employers are holding on to their employees, with 10.6 million jobs vacant at the end of November.

The government reported last Friday that the unemployment rate fell in December to its lowest level in 22 months, at 3.9%, an indication that the labor market is at or near maximum employment.

The working population is about 2.2 million people smaller than it was before the pandemic.

Wednesday’s Federal Reserve Beige Book report on business activity, compiled from contacts across the country on or before Jan. 3, showed many are allowing part-time work or adjusting qualifications «to attract more applicants and retain the existing workforce.

Reduced slack in the labor market and rising inflation have economists expecting the Federal Reserve to raise interest rates in March. Consumer prices rose 7% year-on-year in December, the biggest rise since June 1982.

(Reporting by Lucia Mutikani; Editing in Spanish by Ricardo Figueroa)