Initial jobless claims on the whole are declining, making a slight decrease in tomorrow’s report highly probable but also rather negligible.
Based on the last few weeks’ reports, a drop of at least 5,000 additional jobless claims is more than likely. The claims report for the week ending March 24, showed 359,000 jobless claims, the lowest number of claims filed since April 2008.
“The market will be looking for a resumption of improvements ahead of the non-farm payroll release on Friday,” said David Semmens, the North America economist at Standard Chartered Bank in London.
While steady declines even in small increments generally speaking reflect economic growth, the indicator itself can be misleading. A decrease in unemployment claims means fewer people are getting fired but doesn’t necessarily indicate job growth.
“If we want the unemployment growth to keep declining we need to see much more significant growth in non-farm payrolls,” said Kim Fraser, a junior economist at BBVA research.
Fraser estimates new jobless claims to be “right around the 350,000 mark,” she said.
Overall public sentiment is the most important factor, according to Kim Amadeo, the U.S. Economy Guide for About.com. “The economy is fueled by confidence. If people don’t believe the economy is going to get better they’re not going to spend,” she said
One reason for weak confidence is structural unemployment. For certain demographic groups job possibilities have thinned. Workers over 55 are lucky to find a job, but the majority of these jobs include salary cuts of 20 and 30 percent. Other workers are sidelined by a dearth of skills.
The silver lining here, according to Amadeo is that job readiness anxiety has prompted many job seekers to return to school and government programs have helped to offset these expenses.
While the job market is growing steadily, consumer anxiety and a lack disposable income prevent the recent drop in unemployment claims and small gains in job growth from having greater impact on the larger economic picture.