Huge drop in U.S. jobless claims

Apr 09, 2017, 01:54
Huge drop in U.S. jobless claims

On a more positive note, the unemployment rate declined to 4.5%, its lowest level since prior to the onset of the Great Recession.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers), at 5.6 million, was little changed in March but was down by 567,000 over the year. But some economists, including Ian Shepherdson of Pantheon Macroeconomics, said that the ADP figures likely overstated the official data, since the ADP survey includes lagged data from the previous month.

Last month's weakness in hiring may point to sluggishness in the economy, but unusual weather might also have been a factor. In January the economy created 216,000 jobs, not 238,000; the revised number for February was 219,000, not 235,000. The nation has added 178,000 new jobs on average over the past three months, far above what economists say is the pace necessary to keep up with population growth.

LaSalle Network chief executive Tom Gimbel comments, "Companies that are growing want to hire really good people, and when you have an unemployment rate under 5 percent, there's a shortage of them".

How did the unemployment rate manage to drop so much when the job gain was so weak?

Economists attribute some of the improvement in the participation rate to President Donald Trump's electoral victory last November, which might have caused some unemployed Americans to believe their job prospects would improve.

According to a report released this week, the unemployment rate in the United States fell to 4.5 percent from 4.7 percent, in February.

The U.S. central bank lifted its overnight interest rate by a quarter of a percentage point in March and has forecast two more increases this year. Yet the report on the health of the labor market in March is important for assessing the underlying strength of the economy, and it has policy implications. Temporary help services employment increased by 0.35% in March, adding 10,500 jobs.

Background and Analysis: On a year-over-year (y/y) basis (March 2017 over March 2016), total nonfarm employment was up 1.5%, and monthly job gains have averaged approximately 182,000 over the past 12 months. Manufacturing employment advanced by 11,000 jobs, slowing from the 26,000 positions created in February.

The report showed that large numbers of teenagers, women and Latinos found jobs last month. Retailers including J.C. Penney and Macy's have announced thousands of layoffs as they shift toward online sales and scale back on brick-and-mortar operations. Retail trade lost 29,700 jobs in February, with the vast majority of cuts coming from department stores that sell everything from furniture to vegetables.