3 Charts Explaining the Health of the U.S. Economy
Initial applications for unemployment benefits unexpectedly climbed to nine-week high of 344,000 in the week ended April 26 — a concerning sign for an economy expecting headline employment numbers to strengthen now that the last of the winter’s chilling effect has subsided.
The monthly National Employment Report prepared by the payroll processor ADP and Moody’s Analytics suggested as much; while it may not be the most complete measure of the health of the American labor market and it is less authoritative than the government’s official figure, the report does usually provide hints of overall job growth. And with U.S. employers adding 220,000 workers to payrolls in April, the most in five months, economists were handed a sign that the labor market has survived winter’s harsh grip and job creation is accelerating once again. “The job market is gaining strength,” noted Moody’s Analytics chief economist Mark Zandi after the report was released Wednesday.
The fact that first-quarter gross domestic product growth amounted to just 0.1 percent has also made the April jobs report much anticipated. However, “the weak pace of first quarter GDP growth does not reflect the pace of the labor market recovery,” argued PNC economists Stuart Hoffman and Gus Faucher in a Wednesday research note. “Business are responding to better [consumer] demand by boosting their hiring, and job gains will average around 200,000 per month over the rest of this year.” The firm expects the unemployment rate to drop from March’s 6.7 percent to 6.6 percent in April, even though the labor force is expected to grow “as more people look for work, encouraged by the improving job market.”
1. Jobless claims
While last week’s 14,000 claim increase in the number of Americans applying for jobless benefits was more than analysts expected, the jump was not immense; economists say any claims figure below 350,000 indicates moderate job creation. But nevertheless it was reminder that even though the labor market is indeed resilient, it is no where near full, pre-recession health. Ahead of Friday’s April Employment Situation Report from the Department of Labor, which is expected to show the strongest hiring numbers since last November, a string of economic reports have pointed to a jobs recovery that is once again gaining momentum, but still far from strong. Typically, before the Great Recession began in December 2007 an average number of 320,000 initial claims were filed each week due to the normal churn in the job market.