Although hiring in April was lower than expected, the increase in claims often follows strong hiring reports. Also, job openings are declining amid expectations that the labor market will slow throughout the year.
With more movement in layoffs, the report showed that continuous claims running one week behind increased by 17,000 from the previous week to 1.78 million. The four-week moving average of claims helped smooth out the weekly fluctuation in the number, which increased by 4,750 from the previous week to 215,000.
“Weekly jobless claims are one of the most timely indicators of when the economy is starting to experience a sharp downturn, and the volume of new layoffs this week is worrisome,” wrote Christopher Roepke, chief economist at FWDBONDS. “A week doesn’t make a trend, but if today’s weekly jobless claims are any indication, we can’t be sure that calm seas lie ahead for the U.S. economy.”
Nonfarm payrolls rose by 175,000 in April, below the Wall Street estimate of 240,000 and the smallest gain since October 2023. However, the unemployment rate remained at 3.9%, remaining below 4% since February 2022.
Markets reacted little to the jobless claims release, with stock market futures slightly negative and Treasury yields mixed.
Excluding seasonal adjustments, claims totaled 209,324, up 10.4% from the previous week. New York alone saw an increase of more than 10,000, accounting for more than half of the total rise.
“The low number of claims turned out to be almost boring, and while this surprise spike may be a blip, we should expect more volatility and a trend toward higher claims as the labor market normalizes,” said Robert Frick, corporate economist at Navy Federal Credit. Union.
Federal Reserve officials continue to closely monitor jobs numbers in an effort to bring inflation back to 2%. Following their meeting last week, policymakers noted that “job gains remain strong,” although this came before the release of the April employment report.
Markets expect the central bank to begin cutting interest rates in September.
