Jobless claims dipped last week by a meager 4,000 to a seasonally adjusted 444,000, the Labor Department reported this morning. But even that spare decline is less than it seems. The previous week’s claims were revised up by 4,000, making the last two weeks more or less a wash, depending on whether you’re feeling statistically generous or not.
Stepping back and looking at the broader trend reveals that jobless claims continue to bounce around at the low end of the range for the year to date: roughly 450,000, give or take. That’s a substantial improvement from a year ago, but such observations are rapidly becoming the stuff of ancient history. In short, analysts are asking this data series: What have you done for me lately? Not much, it turns out. Indeed, it’s still unclear if claims will break through this floor any time soon. Clearly, the job market has been struggling in 2010, and based on this set of numbers, more of the same may be coming.
Optimists counter that there’s fresh hope for renewed progress in the wake of two encouraging months of robust gains in nonfarm payrolls (April’s rise was the best in four years). “The labor market is moving in the right direction,” says Ryan Sweet, a senior economist at Moody’s Economy.com, via Bloomberg BusinessWeek. “Claims haven’t fallen as quickly as would be suggested by the non-farm payrolls.” The implication: new filings for jobless benefits are set to fall significantly in the weeks ahead.
Either that or the broad rebound in nonfarm payrolls will stall. The consensus view seems to favor progress, although it’s also clear that dismal scientists are having a tough time feeling confident about what comes next. Andrew Gledhill, also of Economy.com, tells AFP: “The labor market is gradually recovering as businesses are growing more confident and slowing the pace of payroll reduction. That said, current values for initial claims remain high and we would like to see them come lower to be more comfortable with the sustainability of recent net job gains.” He advises that April’s gains in nonfarm payrolls suggest that initial claims deserve to be under 400,000, or about 44,000 claims lower than the latest tally.
That’s going to be tough in the near term, another analyst warns. “There are more jobs being created, but the general trend is that businesses are still reluctant to hire,” notes Gary Shilling of A. Gary Shilling & Co. in a Reuters piece today. “The data show that the issue is more a lack of hiring and not people getting laid off.” And, he adds, “That’s why the unemployment rate [currently at 9.9%, or near the high point for the recession] remains where it is.”