U.S. Weekly Jobless Claims At Three-Month High Amid Omicron Wave

• The number of Americans filing new claims for unemployment benefits jumped to a three-month high last week, likely as a winter wave of COVID-19 infections disrupted business activity, which could weigh on job growth in January. 
• The third straight weekly increase in jobless claims reported by the Labour Department on Thursday was also influenced by unfavourable seasonal factors after the holidays. But coronavirus cases, driven by the Omicron variant, are subsiding and the seasonal factors, the model used by the government to iron out seasonal fluctuations in the data, are seen normalising soon, suggesting the recent surge in applications is a blip. 
• "The Omicron variant of COVID-19 is hurting the U.S. labour market, but the good news is that this will be temporary," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania. 
• Initial claims for state unemployment benefits surged 55,000 to a seasonally adjusted 286,000 for the week ended Jan. 15, the highest level since mid-October. The increase was the largest since last July. Economists polled by Reuters had forecast 220,000 applications for the latest week. 
• Several labour market indicators such as job vacancies and unemployment point to further employment gains in the months ahead as the economic recovery continues, although weaker growth momentum and the withdrawal of government support will narrow the scope of such gains relative to 2021.  However, Fitch Solutions believes upside pressures on nominal wages could intensify over the coming months as labour markets strengthen further.

(Sources: Reuters & Fitch Solutions)