Here’s Why the Labor Market Should Brush Off This Jobless Claims Jump
For the second consecutive week, the labor market has been handed evidence that layoffs have been increasing. Data released by the Department of Labor on Thursday shows that initial claims for unemployment benefits — which serve as a proxy for layoffs — climbed 24,000 to a seasonally adjusted 329,000 in the week ended April 19. By comparison, economists had only expected new applications to rise to 315,000 from the prior week’s upwardly revised 305,000 claims. Still, economists say any claims figure below 350,000 indicate moderate job creation.
During the nearly eighteen months of the Great Recession and in the early days of United States economy’s recovery from recession, layoffs remained elevated as employers pared their workforces about as much as possible to keep labor costs low. But over the course of the recovery, which began almost five years ago, the pace of layoffs has visibly slackened. Generally, jobless claims have painted a picture of a strengthening and resilient labor market. If initial claims for unemployment benefits defined the whole labor market story, then the narrative of the jobs recovery would be easy to summarize: Progress is steady, or at least, the labor market situation is not worsening. More specifically, initial jobless claims increased in late fall and early winter of 2013, just as employers slowed hiring. Claim numbers then once again began tracing a downward path early last month, briefly charting out new recovery lows before recording two straight weekly increases.
One likely reason for last week’s increase in claims is the Easter holiday, which made it more difficult for Labor Department economists to make seasonal adjustments to the data. “It’s largely reflective of the effect from the Easter holiday. We are not that concerned,” Wells Fargo Securities senior economist Sam Bullard told Reuters regarding the uptick. Claims “have been on a declining track since December and consistent with the employment gains we have seen,” he added.