Today’s initial claims report did not influence tomorrow’s jobs report. It came after the survey week related to the current population survey.
Unfortunately, it came just in time to confirm some investor’s fears that improvement in the labor market has stalled.
Initial jobless benefits claims surged last week by 43,000 to 474,000 for the week ending April 30, levels last seen in August. The news stoked fears that the economy’s recovery has stalled and set off a slew of commodity sales. Crude oil tumbled below $100 a barrel as a commodities sell-off swept silver, gasoline, coffee and cotton lower. The largest oil price decline in two years may have been touched off by traders speculating on unemployment numbers that were not seasonally adjusted.
The initial jobless claims report may be artificially high. There are reports that an unusually late spring break for New York schools combined with a new emergency benefits program in Oregon elevated the weekly jobless claims. In New York, cafeteria workers, bus drivers and other contracted school workers file for unemployment benefits when classes are not in session. Claims related to New York spring break were not factored into the Bureau of Labor Statistics’ seasonal adjustment.
Anomalies aside, economists do not expect much of a change in tomorrow’s jobs report either way. The consensus is that the rate will remain unchanged at 8.8%.
Ameriprise Financial’s senior economist disagrees. Russell Price is calling for a slight rise in the unemployment rate to 8.9%.
“The labor force participation rate has been coming down, which is unusual for this point in recovery cycle,” said Price.
Price believes that discouraged workers, those who have stopped looking for work and are no longer counted as unemployed, are seeing job opportunities.
“Slow job creation and a steady trickle of folks returning to the job hunt will push the (unemployment) rate up for a while,” said Price.
While Price thinks 195,000 private-sector jobs were created in April and the consensus calls for 185,000, they all may turn out to be overly optimistic. ADP, the country’s largest private payroll firm, announced today that 179,000 private sector jobs were created in April.