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A now hiring sign is displayed outside a store in Vernon Hills, Ill., on Nov. 13, 2021.Nam Y. Huh/The Associated Press

The number of Americans filing new claims for unemployment benefits unexpectedly rose in the first week of January amid raging COVID-19 infections, but remained at a level consistent with rapidly tightening labour market conditions.

Initial claims for state unemployment benefits increased 23,000 to a seasonally adjusted 230,000 for the week ended Jan. 8, the Labor Department said on Thursday. Economists polled by Reuters had forecast 200,000 applications for the latest week.

Claims remain below their pre-pandemic level, a sign of strengthening labour market conditions. They have declined from a record high of 6.149 million in early April 2020.

Applications for jobless benefits remain very low despite a surge in coronavirus cases, driven by the Omicron variant, which has disrupted activity from airlines to schools as workers call in sick. Employers are hanging on to their workers, with 10.6 million job openings at the end of November.

The government reported last Friday that the unemployment rate fell to a 22-month low of 3.9 per cent in December, an indication that the labour market is at or close to maximum employment.

The work force is about 2.2 million people smaller than before the pandemic.

The Federal Reserve’s Beige Book report on Wednesday of anecdotal information on business activity, collected from contacts nationwide on or before Jan. 3, showed many were allowing part-time work or adjusting qualifications “to attract more applicants and retain existing workforces.”

Shrinking labour market slack and surging inflation are leading economists to expect that the Fed would increase interest rates in March. Consumer prices jumped 7 per cent year-on-year in December, the largest gain since June 1982.

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