This week’s initial jobless claims reading fell to 409,000 (consensus 420,000), providing relief after three straight elevated readings in which claims averaged 449,000 per week. The Labor Department did not note any special factors affecting today’s result. Although the 4-week average for claims is still elevated at 439,000, there was some additional evidence that the earlier readings were partly influenced by temporary factors. Weekly claims at around 400,000 or lower would generally be consistent with a continuation of the moderate labor market recovery that has evolved since late last year.
When initial claims spiked to a high of 478,000 in late April, the Labor Department cited the influence of a number of temporary factors, including 1) a school holiday in New York and 2) auto plant shutdowns due to parts shortages caused by the earthquake in Japan. Today’s report makes available the state by state breakdown of initial claims in the first week of May, where we can now see filings in New York dropped back by a sizeable 23,000. There were also scattered declines in some of the states that would have been impacted by auto-relayed layoffs.
Bottom Line: Today’s lower count of filings for unemployment benefits provides some evidence that a moderate recovery in the labor market is still on track. More readings will be needed to see if unemployment claims have truly receded from the elevated levels of previous weeks.
Ryan Wang
HSBC Global Research