WASHINGTON (Reuters] – Despite massive COVID-19 infection, the number of Americans seeking unemployment benefits increased unexpectedly in the first week. But it remained steady with tightening labor market conditions.

The Labor Department reported that initial claims for state unemployment benefits rose 23,000 to 230,000 in the week ending Jan. 8. Reuters polled economists and predicted that there would be 200,000 applicants for the week ending January 8.

The level of claims remains below the pre-pandemic peak, which is a sign that labor market conditions are improving. In April 2020, they fell to 6.149million from their record high.

Even though there have been an increase in coronavirus cases due to Omicron, the Omicron variant has caused disruption in activity, from schools to airlines, as well as in applications for jobless benefits. There were 10.6 millions job opportunities at the end November, which means that employers have been able to hold on to their staff.

According to the government, last Friday’s report showed that unemployment fell to 3.9% in December from a previous 22-month high. This indicates that there is sufficient employment to sustain maximum demand.

There are about 2.2 millions fewer people working today than there were before the pandemic.

According to the Federal Reserve’s Beige Book Report, Wednesday’s report of anecdotal business information collected from national contacts before January 3, many allowed part-time employment or adjusted qualifications “to attract new applicants and keep existing workers.”

Economists expect the Fed to raise interest rates in March due to a shrinking labor market and rising inflation. In December, consumer prices rose 7% year over year. This was the biggest gain since June 1982.