The drop in jobless claims was meaningfully better than expected, as the weekly figure pulled back further from psychologically challenging threshold of 500,000 that was reached just two weeks ago.
Last week’s private payroll data was good enough to keep hope alive for better job growth in the months ahead, but job creation remains below the pace of new entrants into the workforce.
The cloud of uncertainty that hangs over the economy continues to restrain employers from going “all in” on expansion plans and aggressively ramping up their workforce.
Given the flood of soft economic data that we’ve seen in recent months, the continued improvement in jobless claims is encouraging as it reinforces the reversal of the negative trend that had been in place.
From a bigger picture perspective, we shouldn’t lose sight of the fact that the labor market is still exceptionally weak.
Policy makers continue to search to find new ways to stimulate the deteriorating recovery, all while considering the delicate balance of the urge to provide further support for the recovery with the longer term cost of increasing the federal deficit.
The battle lines are being drawn in Washington in anticipation of the mid-term Congressional elections, and rhetoric about jobs and the economy is certain to heat up in the coming weeks.
As the economy recovers from the so-called “Great Recession”, the road to recovery will be a long one, particularly for the jobs market.