Although private sector job creation has been positive in recent months, the high level of initial jobless claims remains discouraging.
Today’s report is not only significant because claims are headed in the wrong direction, but the impact of reaching 500,000 from the perspective of market psychology is a clear negative.
There’s still too much of a rotating door in the jobs market, with the impact of those employers who are hiring being muted by those who continue to shed jobs.
The result is a jobs recovery that remains stuck in second gear.
For job-seekers, this is another blow to their confidence. For investors, it’s another unfortunate sign that the economic recovery continues to weaken.
We’re all looking for bits of positive news to provide a boost to confidence, but right now they are hard to come by.
If there is any positive news on the labor front, recent indications of weaker productivity gains and increasing average weekly hours for workers could force employers to increase the pace of hiring in the months ahead. However, this seems likely only to the extent that businesses expect demand to continue to build, spurring a virtuous cycle of output and employment growth and avoiding further deterioration in economic conditions.