A week ago I wondered if the rise in jobless claims in the first week of the month was due to a seasonal factors, and the inquiry still stands. But as you’ll see, today’s update raises more questions than it answers, although the short list of potential culprits starts with the seasonal influence of Easter. As for the straight numbers, new filings for unemployment benefits last week fell slightly by 2,000 to a seasonally adjusted 386,000. Historical context is always crucial for evaluating the number du jour, and more so than usual with today’s news.

The latest drop doesn’t mean much, however, given the revision to the previous report. With the fresh data in hand, it’s clear that there’s been a modest change in the trend–a change that may or may not be temporary. As the chart below reminds, jobless climbs jumped by an unusually large amount—unusual, that is, relative to history over the last 11 months. The revised data released today shows that new claims rose during the week through April 7—Easter week—by a seasonally adjusted 26,000. We haven’t seen a weekly increase of that magnitude since April 2011. That’s not an encouraging comparison. The surge in jobless claims a year ago foreshadowed a rough patch for the economy. The turbulence passed, but the question now is whether we’re headed for a new bout of trouble?

The optimistic view is that the jump in jobless claims is temporary, due to seasonal factors related to Easter. Maybe, although there’s reason for doubting that explanation when we look at the raw numbers on a year-over-year basis. As the second chart below shows, unadjusted claims fell a mere 3.7% vs. the same time a year ago. That’s a clear reversal of fortunes relative to the roughly 9%-16% decline range that’s prevailed for months.

Is this a warning of things to come? Possibly, although it’s still too early to say much of anything without more data. Jobless claims, to roll out the familiar caveat, are notoriously volatile in the short run. Meantime, if you look at the first chart above that tracks the seasonally adjusted weekly numbers, you’ll see that even with the rise in claims the absolute level of seasonally adjusted numbers is still quite low–near a four-year trough, in fact.
If there’s a genuine problem brewing here, which would cast a shadow over the outlook for the broader economy, we’ll know fairly soon. The worst case scenario would be a continued rise in the weekly seasonally adjusted numbers along with a confirming jump in the unadjusted year-over-year percentage change.
For now, there are only questions about what next week’s update will reveal. Economist Carl Riccadonna at Deutsche Bank is thinking positively: he tells AP that “what we’re seeing in the numbers is not unusual at this time of year” and so more encouraging news is coming. But in the same article, Jennifer Lee of BMO Capital Markets advises that it’s realistic to interpret the recent data on jobless claims as a sign that “job growth is slowing. Still growing, mind you, but at a slower pace.”
“Bottom line,” says Peter Boockvar of Miller Tabak via RTT News, “the last two weeks reflect a reversal of the slow but steady drop in the amount of those filing for unemployment insurance that we’ve been seeing since November.” That’s not enough to make convincing forecasts, but the change definitely frames how the crowd will be thinking in the near term. “It’s only two weeks,” Boockvar continues, “so way too early to declare a fresh deterioration, but it definitely bears watching because if the pace of firing’s start to pick up again, it certainly says something about what the pace of hiring’s will be.”