Weekly jobless claims rose after setting a more than five-decade low last week. Still, however, new claims came in near pre-pandemic levels, highlighting ongoing improvements in the labor market.
The Labor Department released its weekly jobless claims report on Thursday. Here were the main metrics from the print, compared to consensus estimates compiled by Bloomberg:
Initial unemployment claims, week ended November 27: 222,000 vs. 240,000 expected and a revised 194,000 during prior week
Continuing claims, week ended November 20: 1.956 million vs. 2.003 million expected and 2.049 million during prior week
At 222,000, jobless claims rose for the first time in eight weeks. Continuing claims, which measure the total number of workers still claiming unemployment benefits across regular state programs, did fall to a fresh March 2020 low, reaching 1.956 million.
Last week's downwardly revised 194,000 jobless claims — which brought new claims well below even their pre-pandemic 2019 weekly average of about 220,000 — were seen by many pundits as a one-time event. And this figure was revised down even further from the 199,000 claims first reported last week.
"Last week's drop ... likely overstated strength, due to holiday-related seasonal adjustment issues," wrote Rubeela Farooqi, chief economist for High Frequency Economics, in a note. "The overriding message remains the same: Demand for labor remains strong amid a worker shortage."
And indeed, worker shortages have weighed on the overall labor market for months now. As of October, the civilian labor force was still down by nearly 3 million participants compared to February 2020 levels, according to Labor Department data. Lingering concerns over the virus and a desire by many working-age individuals to seek out new roles with better flexibility, wages and benefits have kept many individuals on the sidelines.
Greg Staples, DWS Group head of fixed income, Americas, said the timeline for the labor market to reach stability and return back to its pre-pandemic conditions is "the real wildcard" for the economic recovery.
"Right now, there're a lot of question as to what it's going to take in terms of wages, to bring workers back into the workforce. There's been hesitation whether it's because they've got built up savings or they're worried about child care or they're worried about COVID," said Staples, during a media call on Wednesday. "But ultimately, as employers have to raise wages up above say that magic $15 an hour level, it will entice workers back in, will get a more natural equilibrium between employers and employees. Wages will stabilize and some of those inflationary pressures will recede."
The Labor Department's next monthly jobs report for November will provide more details about the state of the labor market recovery, labor force participation and wage growth. Consensus economists expect to see that non-farm payrolls grew by 546,000 in November, compared to October's 531,000 gain. The unemployment rate likely ticked down to 4.5%, while average hourly earnings likely rose by 5.0% over last year to accelerate from October's 4.9% year-on-year rise.
The survey period for that report took place during the week including the 12th of the month. In a potentially encouraging sign for the monthly data, that survey period coincided with a precipitous drop in weekly jobless claims to below 200,000.
The Labor Department is set to release its November jobs report Friday at 8:30 a.m. ET.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck