Jobless claims fell by 5K to 457K, a figure that closely matched expectations and is a mildly positive sign for the US labor market.
Claims have reversed some of their climb from February, in which claims rose to 500K. It would take a move below the 450K level, and to stay below that level for the economy to begin to add jobs. So while today’s report shows stabilization, there needs to be some further improvement to change the employment story. Continuing claims, those that are receiving claims for longer than one week, rose by 12K to 4.579 million in data for the March 6th week.
So far, the recovery has been jobless one and with unemployment at 9.7% the Fed is reluctant to move to tighten interest rates. This week, Treasury Secretary Geithner said that it would take 100K jobs per month to move the unemployment rate down by 0.1%.
As we can see from the Feb. non-farm payroll report, firms remain reluctant to add new hires.
The unemployment rate seems to have peaked at around 10%, and is currently at 9.7%. In its interest rate meeting on Tuesday, the Fed upgraded its language around the labor market. Where in the previous statement the Fed said “job losses have been abating” now the language says that the “the labor market is stabilizing.” So while the labor situation deterioration has stopped, that is not enough for the Fed to move to a more hawkish stance on interest rates.
If we see a further fall in jobless claims in the weeks to come and some positive monthly job growth then that would cause the Fed to begin its tightening campaign.
