Is This Report Bad News for the Labor Market?
With the number of Americans filing for unemployment benefits rising more than expected last week, the U.S. Department of Labor’s weekly job report showed continued volatility in the labor market. For the the seven-day period ended January 5, jobless claims increased by 4,000 applications to 371,000. Economists polled by Bloomberg had anticipated claims to fall to 365,000 from the prior week’s revised total of 367,000.
The four-week moving average, a more stable measure of unemployment, rose to 365,750 from 359,000.
While the this week’s unemployment figures fell below expectations, claims were in a steady range. But analysts like Bank of America economist Michael Hanson think that the current labor “story” is about hiring rather than firing. “Hiring has been okay,” he told Bloomberg. “The process is sluggishly moving forward. We need to see better payrolls data to get faster economic growth.”
Initial claims for unemployment benefits, which are affected by weekly firings, tend to decrease as job growth picks up, and over the past month, non-farm payrolls, a measure of job growth, increased by 155,000. While the improvement was better than expected, the unemployment rate remained flat at 7.8 percent. However, Thursday’s report did show that the number of Americans continuing to receive unemployment benefits fell by 127,000 to 3.11 million for the week ended December 29, the biggest drop since January 2011. As Reuters noted, this data indicates that the job market has kept growing at a moderate pace.
“Jobless claims data continue to suggest steady but modest U.S. employment gains,” said BMO Capital economist Robert Kavcic to the publication.