After a couple of weeks of elevated results, claims appear to have settled back near the 350,000 level. Initial jobless claims rose to 352,000 for the week ending April 13, representing a modest increase of 4,000 over the revised tally for the preceding week. The 4-week moving average moved up modestly to 361,250
Today’s print doesn’t change the jobs picture in the least. Labor market conditions still appear to be grinding forward, but pushing against the weight of a slowing economy and subdued confidence. The lack of clarity around the growth trajectory of the economy and indications that the pace of growth has slowed once again in recent months is unlikely to nurture a more confident view for employers.
The jobs market lost a touch of momentum in March. Although the unemployment rate ticked downward to 7.6%, the primary catalyst for that decline was the ongoing exodus of workers from the labor force rather than robust jobs creation, as total nonfarm payrolls fell meaningfully short of expectations.
Recent economic data across the globe has largely been disappointing, reversing the trend of better-than-expected results earlier in the year. Most of Europe is in recession, and recent data out of China suggests growth fell short of expectations. In an increasingly globalized economy, the risk for slower growth domestically remains elevated.
This week’s CPI print suggests inflationary expectations remain subdued. The combination of limited inflation pressure and lackluster labor market conditions should keep the Fed in position to maintain its highly accommodative monetary policy stance. Beyond the Fed, major central banks across the globe are also providing ample liquidity in an effort to spur growth.
Against that backdrop, investors will continue to weigh the risks associated with current economic conditions with the incentive to take risk. Whether that will result in a continuation of the recent momentum in stocks or a reversal of that trend driven by a heightened awareness of risk remains to be seen.
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