Today’s update on jobless claims should dampen worries a bit over the outlook for the economy. New filings for unemployment dropped a healthy 16,000 last week to a seasonally adjusted 339,000. Once again, claims are moving close to the post-recession low of 330,000 reached back in January—a five year low. One number doesn’t mean much, of course, but today’s report certainly boosts the case for thinking positively when it comes to the labor market. In particular, the data du jour implies that the weak payrolls report for March was a one-off event. We'll need to see more supporting evidence to embrace that notion with any confidence, of course, but today's release is a move in the right direction.
It's also encouraging to see a drop in the four-week moving average of new claims—the first decline in more than a month. That’s a sign that the drop in today’s weekly number may be more than random noise.
A stronger clue can be found in the unadjusted data’s year-over-year change, which posted a hefty 12.7% decline last week vs. the year-earlier level. Indeed, that’s the biggest retreat in the annual pace in six months.
The general message here is that the odds look favorable for anticipating that modest growth in the labor market will roll on. That assumption was under attack with the release of the March jobs report a few weeks back. It’s still too early to dismiss the sharp slowdown in rate of growth in payrolls last month. But today’s claims release at the very least tells us to refrain from assuming the worst for the labor market, and the economy.