US jobless claims hold below pre-pandemic levels as consumer spending jumps

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Stateside output dropped 1.4 per cent in the first three months of the year, a huge miss from Wall Street’s expectations of a one per cent expansion, official figures released today revealed

The number of Americans claiming unemployment benefits stayed below pre-pandemic levels in a sign the US economy is holding up well in the face of raging Covid-19 cases, reveal new figures published today.

Weekly jobless claims were unchanged at 205,000, the US Labor Department said.

Unemployment benefit claims tend to rise over the winter period. But, a tight labour market has kept claims lower due to businesses competing to attract talent amid a smaller worker pool.

American firms have ramped up hiring as the spectre of the Covid-19 recedes, offering routes for jobless Americans to re-enter the labour market.

The emergence of the Omicron variant of coronavirus has clouded the outlook for the global economic recovery from the pandemic. However, experts were upbeat on US’s prospects.

“We expect claims to remain around 200,000 as layoffs remain low amid tight labor market conditions,” said Nancy Vanden Houten, lead US economist at Oxford Economics.

“The spread of the Omicron variant may lend an upside risk to that forecast, but for now, it appears as though businesses are striving to remain open,” she added.

Strong consumer spending has also kept demand for workers high as businesses scramble to scale capacity.

A separate report published by the US Commerce Department today found consumer spending, which accounts for more than two-thirds of US economic activity, jumped 0.6 per cent last month.