Initial jobless claims declined modestly in the week ending May 4, to 323,000 from a downwardly revised 327,000 the week prior to their lowest level in over five years. The four-week average also edged lower to below 337,000.
Historically, when initial jobless claims have hovered around current levels, stronger payroll gains would be expected. Yet corporations remain somewhat reluctant to meaningfully ramp up hiring, particularly for full-time workers.
The perceived vulnerability of the economy to tight fiscal policy in the months ahead is still giving employers reason to move slowly in hiring. Moreover, small businesses, which are a significant engine for hiring growth, are increasingly wary of the requirements of health care reform on their businesses. At the margins, many small businesses are turning to part-time workers rather than adding full-time workers to meet their needs.
Although the trend in the employment market has been two-steps forward, one step back, overall the trend has been a slowly positive one. Today’s release reinforces that moderate positive momentum still exists.