Summary
Initial filings for jobless claims rose last week, but the downward trend remains intact. Revisions show last week’s filings dipped below their Great Recession peak, but the level of claims remains distorted. Overall, the lower trend in filings in recent weeks points to a substantial pickup in hiring in tomorrow’s payroll report.
Claims Rise Off of Downwardly Revised Figure Last Week
Initial jobless claims continued their see-saw pattern, with filings rising to 719K the week ending March 27. The increase comes off a downward revision to last week’s figure, now reported as 658K. That means that initial filings fell below the high-watermark of the past recession at least once this past year, but the increase in today’s figures underscores that the labor market remains strained.
Today’s figures included annual revisions to the seasonal factors. Taking into account updated seasonal factors, the peak in claims is now reported to have been lower (6.15M versus 6.87M) and a week later (April 4 versus March 28). Nevertheless, the overall picture of claims this past year remains striking. Since March of last year, 79M claims for regular benefits have been filed, with another 28M filed under the new Pandemic Unemployment Assistance program. Together, that equates to 70% of payrolls (or 67% of household employment) pre-pandemic and reflects duplicate filings and fraud, but also the tremendous churn in the labor market since COVID, with some workers losing jobs more than once as restrictions and activity fluctuated this past year.
Downward Trend Remains, Pointing to Hiring Pickup
Overall, we continue to believe the change in claims remains a useful data point in assessing the direction of the labor market, even as the level is not particularly telling at present. Through the week-to-week chop, the downward trend in claims remains. The four-week average fell again, by 10,500 this week, which is slightly slower than the past few weeks, but still a pickup relative to the early part of this year.
We look for tomorrow’s payroll report to show that hiring is shifting into a higher gear, and look for job growth of 675K in March. If realized, that would be the strongest monthly gain since the Fall. Less severe weather should give the March figures a boost, but more broadly, the better COVID picture, recent fiscal support to households and businesses and warming weather point to broad-based gains. We look for a substantial rebound in hiring over the next few months, with March payrolls being a big step along the way.
