US: Rise in claims stands in contrast to other readings of the labor market at present – Wells Fargo

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Economic data released on Thursday in the US surprised to the downside, with the weekly claims report showing worst-than-expected numbers. Analysts at Wells Fargo point out that the second consecutive increase in weekly claims to 744K and the modest increase in the four-week average stand in contrast to nearly all other reads on the labor market at present, which point to the recovery progressing.

Key Quotes: 

“Initial jobless claims rose for a second straight week, coming in at 744K. The increase over the past two weeks was enough to nudge the four-week average up for the first time since January of this year.”

“The recent rise in claims stands in contrast to almost all other readings of the labor market at present. Hiring has picked up substantially, with 916K jobs added in March. Business surveys corroborate stronger job growth, with the ISM manufacturing and services employment indices both jumping last month. Job openings according to both the BLS and Indeed.com have surpassed their pre-COVID levels. And even from households’ perspective, the labor market has improved recently, with the difference between the share of consumers viewing jobs as “plentiful” versus “hard to get” in March seeing its biggest jump since June.”

“There is little to suggest that the labor market recovery is once again stalling, let alone backsliding, as recent claims figures hint. Instead, the sideways move likely reflects the usual weekly noise—made especially difficult this time of year by the variable timing of Easter—as well as ongoing issues related to backlogs, substantial churn in some industries and even fraud.”

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