The release of disastrous initial jobless claims data has already lead analysts to question the viability of the US Recovery. Attributed to seasonal factors; including Spring break layoffs and the introduction of an emergency benefits programme; the data saw the number of initial jobless claims rise by more than 400,000 for a fourth consecutive week. In total, initial jobless claims were reported as 474,000; a considerable rise on both the previous week’s figure of 429,000 and the expected figure of 410,000. Indeed, whilst analysts had been expecting the figure to drop for the week ending 30th April, the eventual data illustrated that new claims had in fact reached their highest weekly level since August of last year.
Despite the gains, some analysts have been quick to point out that the latest round of data could merely imply a slowdown in the labour market rather than a dropoff. Indeed, with the data following data from two months earlier in which new claims reached a two year low, it would be prudent to acknowledge that the US is unlikely to see employment levels similar to those in 2007 for a number of years.
At the same time, whilst the latest round of data will undoubtedly prove unfavourable in the short term, it is important to note that the inclusion of a range of seasonal factors makes analysing the data at this time challenging; something for which many analysts have already criticised the US Labour Department. Whilst the claims data appears to show that new claims exceeded 400,000 for a fourth consecutive week, the seasonal factors referenced above make gauging the actual claims figure difficult.
Bear in mind when preparing for this afternoon’s Non Farm Payroll data that the rise in claims could indicate poor overall performance within the labour market in May. Whilst the data does not immediately indicate declines in the US Economy as a whole, a more complete picture will be gleaned from these insights combined with the NFP data.
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