US Jobless Claims Edge Lower as Winter Storm Effects Linger

Fallout from the severe winter storm continues to show up in employment data, with initial jobless claims remaining elevated last week.

The number of Americans filing applications for first-time unemployment benefits dropped by 5,000 to 227,000 for the week ending Feb. 7, according to new Department of Labor data released on Feb. 12.

This is down from the previous week’s upwardly revised 232,000 and higher than the consensus forecast of 222,000.

Last week, weekly claims increased to a two-month high after arctic temperatures and heavy snowfall blanketed multiple parts of the country.

The storm impacted businesses and employment agencies, leading to a temporary spike in unemployment filings that could remain elevated for the next couple of weeks. The increase in applications has been most pronounced in areas heavily affected by the storm, particularly the Northeast and Midwest.

Prior to the storm, initial jobless claims had hovered around the historically low level of 200,000.

The four-week average, which strips out week-to-week volatility, rose to 219,500 from 212,500 in the previous week.

Recurring claims climbed for the second straight week, although they remained below 1.9 million.

Continuing jobless claims—a measure of the number of individuals currently receiving unemployment benefits—rose to 1.862 million from the previous week’s downwardly adjusted 1.841 million. This came in slightly above the market estimate of 1.85 million.

Economists view this data as a proxy for the challenge workers may have in finding new employment. The recent decline could also highlight the exhaustion of unemployment benefits, since many states cap eligibility at 26 weeks.

January’s long-term unemployment rate—jobless for 27 weeks or longer as a percent of total unemployed—slid to 25 percent from 26 percent in December, according to the Bureau of Labor Statistics.

Employment data have sent mixed signals about the health of the labor market. However, the January jobs report could be evidence that conditions may be on the verge of a turnaround.

Stability Comes to the Labor Market

The U.S. labor market started 2026 on a high note, with the economy adding 130,000 jobs, better than expected. The unemployment rate dipped to 4.3 percent, while average hourly wages rose by 0.4 percent.

But the revisions were a black eye in the January payrolls report.

Attached to last month’s employment numbers were revisions that showed 2025 created only 181,000 jobs, meaning the labor market added 15,000 jobs per month on average. Additionally, this indicates that there were more than 1 million fewer jobs than initially reported.

Despite minimal job growth, the economy’s overall performance was impressive, according to economists at RBC Economics.

“Importantly, what the benchmark revisions tell us is that the economy did what it did last year with fewer workers,” they said in a Feb. 11 note.

“The exception is output per worker – which should be a positive story,” they continued. “Don’t be fooled by the headlines that suggest the US ‘lost’ jobs last year – those ‘jobs’ never existed, and it should be that much more impressive the US economy performed as well as it did.”

A good indicator, they suggested, was the uptick in hours worked.

Average weekly hours rose to 34.3 in January from 34.2 in December—higher than the consensus forecast of 34.2, according to the Bureau of Labor Statistics.

Labor productivity, meanwhile, has accelerated in recent months. In the third quarter, output increased by 4.9 percent following a 4.1 percent increase in the April–June 2025 period.

“We think the aggregate hours is a better leading indicator of labor market weakness over layoff announcements because it sends a true signal of labor demand,” RBC economists wrote.

Ultimately, the data may signal that the worst is behind for the U.S. labor market.

“The addition of 130,000 jobs shows the labor market is stabilizing,” Gina Bolvin, president of Bolvin Wealth Management Group, said in a note emailed to The Epoch Times.

This gives the Federal Reserve enough breathing room to remain patient and keep interest rate cuts on the table, she added.

Following the January jobs report, the futures market penciled in a 48 percent chance of a June rate reduction, according to the CME FedWatch Tool.

The Fed will hold its next two-day monetary policy meeting on March 17 and 18.