Today’s weekly jobless claims report suggests that that the harsh winter really is the main source of the soft economic data we’ve seen over the past month. If so, the future is somewhat brighter for anticipating a spring rebound. The standard caveat applies when it comes to drawing conclusions from one jobless claims number. Nonetheless, if we suspend our capacity for common sense for a minute, today’s update looks encouraging for thinking that the economy isn’t as wobbly as it appears.
New filings for unemployment benefits fell 26,000 last week to a seasonally adjusted 323,000, the Labor Department reports. That leaves claims slightly below average relative to the range so far this year. It’s hard to get excited about today’s update if you’re looking for convincing evidence that the labor market is roaring forward. Yet the data du jour pours cold water on the idea that the economy is hopelessly caught in a cyclical downturn. Rather, today’s report aligns with the view that moderate growth rolls on, albeit with more than the usual run of bumps of late.
An especially welcome sight: the year-over-year change in claims posted a decline last week, which strengthens the argument that the economy is still poised to create jobs at a decent if uninspiring rate. New filings dropped 5% during the week through March 1 vs. the year-earlier level. Yes, that’s middling in terms of recent annual decline rates. But the fact that fewer workers are losing their jobs today compared with this point last year points to a labor market that’s still healing.
If the economy was decelerating for reasons that had little or nothing to do with the weather, jobless claims would likely be rising. For the moment, we’re not seeing that. Even so, it’s going to take at least another month of data releases to develop a deeper level of confidence about the near-term macro outlook. But for today, at least, there’s another positive data point to consider.
“The overall trend here is positive and consistent with a gradually improving job market,” says Gennadiy Goldberg, a US strategist at TD Securities. “We have stemmed the bleeding in layoffs, what remains is to add jobs.”
In fact, the big picture for US macro has yet to flash a warning sign, based on a broad review of economic and financial indicators through January. Granted, the handful of February numbers published to date are mixed, and more of the same is probably coming. But if February’s economic profile has been victimized by the winter, we won’t have a good read on the trend until the March updates are published.
Yes, there’s a long way to go for deciding if the weather is, or isn’t, to blame. Today’s release, however, is a small downpayment for thinking positively.