Unemployment Claims Reflect Sluggish Recovery
Market participants who want to use this week’s initial unemployment insurance claims report to gain some insight in the the labor market may end up disappointed. The report, released on Thursday morning, by the U.S. Department of Labor, indicates more of the same give-and-take that has characterized most unemployment data for the last year.
Initial unemployment claims for the week ended February 23 declined about 6 percent month over month to 344,000. The four-week moving average declined about 1.9 percent month over month to 355,000. This is a 3.2 percent improvement over the moving average for same week in 2012.
Ostensibly this is a slight improvement, but it’s hard to determine whether new hiring or the expiration of benefits caused this shift. Several states reported fewer layoffs in construction and manufacturing, which could be a reflection of healthy housing and PMI data that was released earlier in the month, but the slight drop is not enough to convince anyone that the headline rate will decline this month…
Next Friday, the Department of Labor will release the highly-watched Employment Situation report that sets the headline U-3 unemployment rate. The official rate ticked up from 7.8 percent in December to 7.9 percent in January, and only the most optimistic observers are expecting it to drop in the February report.
Also released on Thursday morning was the government’s second estimate of fourth-quarter GDP. The first estimate showed an unexpected drop in economic activity with a reading of -0.1 percent. Based on better-than-expected trade and manufacturing data, consensus estimates for the revised reading were looking for +0.5 percent growth.
But, in line with the tepid nature of the U.S. recovery, the revised GDP report once again disappointed, and showed just +0.1 percent growth. The report comments: ” While today’s release has revised the direction of change in real GDP, the general picture of the economy for the fourth quarter remains largely the same as what was presented last month.”