First, the bottom line: Targeted layoffs, but no widespread surge
- Initial claims remain in a constructive range, consistent with solid labor conditions.
- Certainly, targeted layoffs by various employers have been in the headlines. But for all the concern about the near-term economic outlook, there are no indications of widespread slashing of payrolls.
By the numbers
- Initial jobless claims declined last week, falling to 228,000 for the week ended May 3 — a notable decline of 13,000 from the prior week’s 241,000.
- The four-week moving average edged higher, rising by 1,000 to 227,000.
- Continuing claims dipped to 1.879 million for the week ended April 26 from 1.908 million a week prior.
What’s the story? Labor conditions showing limited slippage
- As perhaps the best high-frequency indicator of the jobs market, initial jobless claims may not deliver a comprehensive view of labor conditions but do provide critical insight into worker retention.
- Against an uncertain economic backdrop, any surge in layoffs would raise further questions about the near-term risk of recession. Today’s jobless claims report should again allay those concerns for the time being.
- Continuing claims also dropped last week but remain nearly 100,000 higher than a year ago. At the margins, newly unemployed workers appear to be having a harder time finding new employment. Even so, continuing claims are consistent with a relatively solid labor market.
- While the claims data has remained relatively firm, it only tells part of the story. Job openings continue to decline, and the uncertainty about the near-term direction of the economy will undoubtedly make many employers think twice about adding to their payrolls in the near term.
- Hiring and firing are two very different decisions though. Given the hiring challenges that employers experienced in recent years, they’re not likely to cut workers at the first sign of trouble.
- Broadly speaking, some slippage in labor conditions has been apparent, but not to the point that alarm bells are appropriate. The labor market needed to cool down from its overheated post-pandemic state. That’s allowed the demand for workers to come back into better balance with availability, although some employers still indicate that finding qualified workers is a challenge.
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