Drop in weekly jobless claims is bright news ahead of April unemployment report
The number of people applying for jobless benefits declined sharply last week, the government reported Thursday, providing a surprisingly upbeat signal leading into Friday’s jobs report.
The drop in applications for unemployment assistance fell by 27,000 to a seasonally adjusted 365,000, the largest weekly drop in nearly a year, the Labor Department reported. The four-week average, a less volatile measure of the rate of layoffs around the country, was up slightly to 383,500 last week.
“If sustained, today’s better-than-expected jobless claims suggest hiring may be gaining steam after a recent slowdown,” said Joe Manimbo, senior market analyst at Western Union Business Solutions.
Manimbo said the report, coupled with a recent one showing strong manufacturing growth, suggests “a resilient economy.” Still, he warned, the overall jobs picture remains unclear. “Friday’s jobs report should give investors more clarity on the state of the job market,” he said.
The drop in jobless claims was welcome news after claims had gone up in the previous three weeks, raising concerns about the pace of job creation and the overall economic recovery.
Those worries were fueled by a disappointing March employment report, which showed the pace of job creation abruptly slackening after robust increases through the winter. Employers added just 120,000 jobs in March, half the pace of the previous three months.
Analysts attributed that slowdown in part to the exceptionally mild winter for much of the country, which moved up hiring in some seasonal jobs, such as construction, from the spring to the winter months.
That slowdown raised questions about whether the economy was in for a spring swoon for the third consecutive year, a development that would have profound implications for the presidential race.
A survey released Wednesday by payroll firm ADP said businesses continued to temper the pace of hiring in March, creating only 119,000 new jobs.
Economists point out that the ADP survey often deviates from the Labor Department’s official jobs report, due out Friday. Economists expect that the government report will show that 163,000 new jobs were created last month and that the politically sensitive unemployment rate will remain at 8.2 percent.
The unemployment rate, which stood at 9.1 percent in August, has fallen sharply, but many analysts think that the improvement isn’t attributable to an underlying strength in the economy.
Their caution is supported by a string of mixed economic data. A report this week showed that manufacturing output, exports and employment, all bright spots in the recovery, grew at their fastest pace in 10 months.
But on Thursday, the Institute for Supply Management said its measure of employment in the services sector had declined last month, slipping below economists’ forecasts.
Also Thursday, the Labor Department reported that worker productivity had dropped by an annual rate of 0.5 percent during the first quarter of the year.
And Thomson Reuters reported that chain store sales rose by a meager 0.8 percent last month, below analysts’ expectations. That brought worries that the brisk pace of retail sales rung up in the first three months of the year may not be sustainable.
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