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UPDATE: Weekly US jobless claims slip but stay close to 5-month high

Seasonally adjusted U.S. unemployment claims fell in the week ended Jan. 16 but stayed near their five-month high, as the labor market continued to reel from the impact of the coronavirus pandemic on businesses.

Jobless claims totaled 900,000 in the week ended Jan. 16, down from the previous week's revised reading of 926,000, which was still the highest since the 1.01 million initial claims recorded in the week ended Aug. 22, 2020, data from the Department of Labor showed.

The consensus estimate of economists polled by Econoday was for weekly jobless claims to total 900,000.

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Despite last week's decline, jobless claims remain "alarmingly high" and point to a deterioration in labor market conditions, according to Lydia Boussour, senior economist at Oxford Economics.

"Fiscal stimulus prospects, along with broader vaccine diffusion, are pointing to a brightening labor market outlook but with the pandemic still raging, claims are poised to remain elevated in the near-term," Boussour wrote in a research note.

With just a slight decline in initial claims, another negative print for nonfarm payrolls in January remains a possibility, said Sarah House, senior economist at Wells Fargo Securities. The U.S. economy shed 140,000 jobs in December 2020, marking the first decline in employment since April 2020.

The four-week moving average of initial claims rose to 848,000 from the prior week's revised 824,500.

In the week ended Jan. 9, seasonally adjusted insured unemployment fell to 5.05 million from the preceding week's revised level of 5.18 million. The seasonally adjusted insured unemployment rate, which measures the proportion of the labor force receiving unemployment benefits, was 3.6%, unchanged from the previous week's revised figure.