Today’s weekly update on jobless claims offers a glimmer of hope that there’s enough growth momentum in the economy to push new filings lower in the weeks ahead. But after reading yesterday’s disappointing ADP employment report, we’re not expected any sudden bursts of good news. Tomorrow’s jobs report from the Labor Department may suggest otherwise, of course. But for the moment, it’s still touch and go with payrolls.
The good news is that new filings for unemployment benefits dipped last week by 7,000 to 444,000. Save for two weeks earlier this year, that’s the lowest in nearly two years. So why aren’t we enthused? After all, this isn’t the first time that jobless claims have moved sideways for an extended period in the wake of a recession. But the previous downturn in the economy was an extraordinary reversal of fortunes, and the blowback continues to reverberate around the world. Yes, there’s a broad economic recovery underway in the U.S. and in much of the world. But it’s a recovery that’s still vulnerable and prone to setback. Recognizing as much makes it difficult for distinguishing between a normal but temporary slowdown in new claims vs. an ominous sign of another round of economic weakness.
The story’s the same with continuing claims, which tracks people who are already collecting jobless benefits. As our second chart below shows, there’s been a sharp fall in continuing claims over the past year, echoing the drop in initial claims and the broad rebound in the economy, albeit from recession lows. But the fall in continuing claims has stalled recently.
There’s a lot riding on tomorrow’s payrolls update for April. The consensus forecast calls for a rise of 187,000 in nonfarm payrolls for last month, Briefing.com reports. That’s hardly a stellar gain at this stage, but if it proves accurate it would probably buy time for keeping investor sentiment safely in positive territory. Anything materially below that estimate, however, may trigger a wholesale re-evaluation of the economic recovery’s health.
But don’t dismiss the forces of positive momentum just yet. Gallup reports today that its Job Creation Index rose to its highest level last month since November 2008. Gallup explains that its index “suggests that layoffs were down across the U.S. in April” and there was “a modest improvement in hiring.”
The only mystery now is whether the Labor Department has confirming data…or not.