US jobless claims rose less than forecast last week, signaling underlying strength in the labour market despite a significant drop off in job creation in March that was likely due to severe winter weather.
Jobless claims rose 14,000 to a seasonally adjusted 281,000 in the week ended April 4, the Department of Labor reported on Thursday. A median estimate of economists called for an increase to 285,000 last week. Jobless claims had fallen to 267,000 the previous week, the lowest level in 15 years.
The four-week average for jobless claims, a less volatile measure of the labour market, fell 3,000 to 282,250 in the week ended April 4. That was the lowest four-week average since June 2000.
Initial jobless claims are used as a proxy for firings in the labour market. A drop in jobless claims is typically associated with stronger hiring trends.
The number of workers continuing to receive unemployment benefits declined to 2.304 million in the week ending April 3, the lowest in more than 14 years. Continuing claims had dropped to 2.327 million the previous week.
Thursday’s report supports the idea that the labour market recovery was broadening despite a significant pullback in the pace of hiring last month. US employers added just 126,000 payrolls in March, the smallest increase since December 2013. It was also the first time in 14 months the economy added fewer than 200,000 jobs. According to analysts, severe weather likely played a major role in the disappointing figures.
Nonfarm payroll growth in February was revised down to 201,000 from 295,000, official data revealed last week.
Unemployment in March stabilized at 5.5%, a more than six-and-a-half year low. The Federal Reserve expects the unemployment rate to fall to as low as 5.2% this year, according to the March summary of economic projections. The economy is expected to return to full employment by 2017.
Harsh winter weather is expected to have slowed economic growth in the first quarter. According to analysts, severe weather probably shaved as much as 0.7 percentage points from first quarter GDP growth. The recovery is expected to regain momentum in the second quarter.
The Department of Commerce will release official Q1 GDP data on April 29.
Based out of Toronto, Canada, Husni Sam Borji is senior macroeconomics analysts who contributes regularly to TradersDNA, where he examines the global financial markets. Husni Sam has authored dozens of government reports and industry whitepapers, as well as thousands of financial articles. Husni Sam holds a BA from the University of Windsor and a Master’s degree in Economic Public Policy from McMaster University.
His expertise includes macroeconomics, fundamental analysis, industry research and global political economy.