The improving prospects of the U.S. economic recovery, particularly the labor market, have pushed stocks closer to their February highs in the last few days. Today’s Jobless Claims report, though on the softer side, is nevertheless a net positive.
Claims for the week rose from the originally reported level of 382,000 in the preceding week. But given the upward revision to the prior-week’s level by 12,000 to 394,000, claims actually fell by 6,000. The four-week moving average increased by 3,250 to 394,250. A major revision to the series going back to 2006 caused the unusual changes to this week’s claims numbers.
The mixed nature of the claims report notwithstanding, a number under 400,000 is a net positive and indicative that the underlying fundamentals of the labor market are improving. Wednesday’s ADP report was another such reassuring sign.
We have been seeing similar positive signs about the jobs situation from a host of other reports over the last few months, specifically the employment components of the ISM indices. But this trend can only be confirmed by the monthly non-farm payroll report from the Bureau of Labor Statistics, which comes out tomorrow (Friday) morning.
Jobs aside, we also have the Chicago PMI for March and Factory Orders for February, that will give us another snapshot of the manufacturing sector. Manufacturing has been in the forefront of this recovery, driven by strong exports, growing corporate investments, and improving consumer spending.
But the market’s focus will remain on the labor market. And given the postive momentum of the last few days, I wouldn’t be surprised if we see some tentativeness today ahead of the Friday jobs report.