Jobless claims hit lowest level in 52 years

New claims for unemployment insurance dropped to 184,000 last week, according to data released Thursday by the Labor Department, falling to the lowest level in more than 52 years.

Last week’s total was the lowest since September 1969 and breaks the previous record for the lowest number of weekly jobless claims since the emergence of the pandemic.

In the week ending Dec. 4, seasonally adjusted initial claims for jobless aid fell by 43,000 from the previous week’s revised level of 227,000.

While the plunge in jobless claims appeared to show a strengthening labor market, economists said that the scale of the drop could be skewed by seasonal adjustments based on pre-pandemic hiring patterns. 

Non-seasonally adjusted claims totaled 280,665 last week, rising 29.3 percent from the previous week. The Bureau of Labor Statistics (BLS) said it was expecting a seasonal increase of 106,047 claims last week.

Joe Brusuelas, chief economist at audit and tax firm RSM, said on Twitter that the decline “almost certainly overstates” the strength of the labor market. He compared the steep decline to a quirky November jobs report, which showed the U.S. gaining 210,000 jobs — half of what economists expected — but the unemployment rate falling to 4.2 percent.

The BLS and private sector forecasters have faced challenges analyzing the economy and gathering data thanks largely to obstacles created by the COVID-19 pandemic. Low survey response rates, intense churn in the labor market, and the opening and closing of many businesses are among several factors impeding analysts. The pandemic has also thrown off historic seasonal hiring and economic patterns, which makes it difficult for analysts to sort out the true strength of the labor market.

“Seasonal adjustment factors continue to wreak havoc with the data, and the claims figures may remain volatile through the holiday season. Looking past the noise, we think claims will eventually hover more consistently around pre-pandemic levels of 220k, assuming the Omicron variant of the coronavirus has only a moderate negative impact on the economy,” wrote Nancy Vanden Houten and Greg Daco of Oxford Economics in an analysis.