Jobless claims fell sharply for the week of April 28, reaching 365,000, down 27,000 from an upwardly revised 392,000 in the prior week. Although this was a positive sign, the four-week moving average has been trending higher since its recent trough at the end of March. That trend continued with the average increasing marginally to 383,500 for the week. That upward trend in the four-week moving average since the end of March suggests some modest weakening in momentum. However, the four-week moving average remains in a range which still suggests improvement in the overall employment situation.
Although job market indicators have largely disappointed since March, the perception that employment market conditions improved over the winter months boosted the consumer outlook, fueling the recent reduction in household savings and an increase in consumer spending.
It’s been discussed before, but it bears repeating: seasonal adjustments are in the process of reversing their impact on reported data, for better or worse. The degree to which those statistical adjustments skewed reported results and moderate weather conditions accelerated seasonal job gains should become increasingly apparent in the months ahead.
The most recent report on nonfarm payrolls was disappointing, suggesting a slowdown in the pace of job creation in March. Yesterday’s ADP employment report provided evidence of a potential further moderation in job creation in April, although the reliability of that report as a predictor of the Labor Department report has been inconsistent. The market will now turn its eyes toward the April job report tomorrow morning. If job creation is weak again in April, concern about a softening in the jobs market will be heightened. A strong print tomorrow would go a long way, at least temporarily, toward alleviating concerns about a further slowdown in the jobs engine.