Amidst increasing concerns that tough fiscal headwinds are slowing job growth, the Labor Department said Thursday that initial claims for unemployment benefits fell to 324,000 last week — the lowest level reported in the past five years. While payroll processor ADP’s National Employment Report showed Wednesday that employers added a disappointing number of new jobs to their payrolls in April, last week’s claims data signaled fewer workers were laid off.
Data supplied Thursday by the outplacement consultancy firm Challenger, Gray & Christmas supported that conclusion; job cuts fell to their lowest level since December last month as employers planned to cut payrolls by 38,121 jobs in April, noted the firm’s job-cut report. Layoffs are now at pre-recession levels, meaning they are consistent with normal churn in the job market. But even though fewer unemployment claims were made last week, job growth remains sluggish. The National Employment Report published by ADP showed that businesses were hesitant to hire new employees in April; only 119,000 jobs added to payrolls — the weakest month for hiring since September.
Economists had been anticipating an increase in claims for unemployment benefits, but instead, the report showed that claims had decreased by 18,000 from the prior week, marking the lowest level since January 2008. Back in 2009 — during the height of the recession — job claims rose as high as 670,000. Weekly applications for unemployment benefits at or below 350,000 are generally consistent with moderate hiring.
Jobless claims figures are considered a good measure of layoffs and provide the first look at the employment situation for any given month. Still, the weekly figures can be volatile, so economists use the four-week moving average to understand wider trends. Last week, that figure also declined, plummeting 16,000 to 342,250.
The Labor Department’s official jobs report for April is schedule to be released Friday, and that data will give economists a more complete picture of the health of the labor market last month. On average, the U.S. economy has added 159,000 jobs each month over the past 12 months, and it seems likely that April will fall in line with that trend. Those figures do correspond with a modest pace of hiring, but, according to economists, they remain far too low to significantly reduce the level of unemployment from the current rate of 7.6 percent.
Economists surveyed by CNNMoney expect that the economy added 140,000 jobs in April, a marked improvement from the 88,000 created in March. But the unemployment rate will likely remain unchanged. In order to reduce the ranks of the long-term jobless, economists say that job gains must total 250,000 per month. However, job growth remains far below that level, and as of March, approximately 11.7 million people were unemployed, while about 3 million people filed for their second week or more of unemployment benefits during the week of April 20.