The number of Americans who filed for initial jobless claims in the week ending May 2 was 601,000, much less than expected by analysts, and a decrease of 34,000 compared to the prior week’s 635,000 claims.
The drop in initial jobless claims marks the lowest figured since January 24. In addition, the four-week average, now at 623k, has been trending downwards for five straight weeks.
The Dept. of Labor also reported that continuing claims ― the number of people receiving unemployment benefits ― rose to 6.351 million, a record high, in the final week of April. That’s an increase of 56,000 from the prior week’s figure of 6.295 million.
Economics strategist Ian Pollick from TD Securities said, “Taken together, the U.S. labor market might be at an inflection point in terms of job destruction, though the fact that economic activity continues to be below optimal levels will keep employers hiring intentions contained.”
The rise in continuing claims was expected, but the drop in initial claims is the third labor release this week to surprise to the downside.
On Wednesday, the ADP private employment report showed 491,000 jobs were lost in April, in contrast to expectations closer to 645,000. In the same morning, a private industry Mass Layoffs report said mass firings in April were down 12% from the prior month.
Analysts will be hoping for yet another downside surprise in the Nonfarm Payrolls report on Friday. In March, the official statistics showed 663,000 jobs lost in a single month. Analysts are looking for a less harsh reading in April, but expectations are all over the map.
Also posted at 8:30 am were the First Quarter Productivity and Unit Labor Costs report. The Bureau of Labor Statistics said NonFarm Business Productivity ― a measure of output per hour ― rose 0.8% in Q1. Unit labor costs rose 3.3%.
The good news there is that productivity per hour is advancing, but actual output dropped 8.2% in the quarter, and hours fell 9.0%.
Just prior to the release, analysts at BMO Capital Markets stated: “While productivity growth has slowed a tad, the still-solid pace has helped preserve real wage gains for the 91 percent of the workforce with jobs, while keeping an extra damper on inflation.”