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3 indicators the job market is seeing what one economist calls an ‘unambiguous cooldown'
Facts
- On Thursday, the US Labor Dept. reported that Americans filing first-time claims for unemployment benefits rose by 13K to a seasonally adjusted total of 242K for the week ending April 29, rising more than economists' forecasts of 240K. Unadjusted claims fell by 5,518 to 219,619.[1]
- The data came a day before the government issued its monthly jobs report for April, which showed the economy added an additional 253K jobs — higher than the expected 180K.[2]
- Meanwhile, continuing claims, which include people who have received unemployment benefits for a week or more, fell by 38K to 1.81M in the week ending April 22, marking the biggest drop since last July. The total 242K claims were the biggest rise in six weeks.[3]
- Meanwhile, layoffs were down 25% (66.9K job cuts) from March but up 175% from April last year.[1]
- Coming as the Federal Reserve (Fed) hiked interest rates by another 0.25% Wednesday, another report released Thursday showed US worker productivity declined more than forecasts projected in the first quarter, while labor costs accelerated, underscoring ongoing inflation pressures.[4]
- Separate data also showed that private payrolls rose the most in nine months. The Fed is expected to pause interest rate hikes to allow its policy of costly borrowing to make its way through the economy.[4]
Spin
Narrative A
Although more data needs to be released, current trends seem to be showing a cooling — and potentially negative — job market. While the US saw a hiring boom as the country left the pandemic in the rearview, current inflation rates and subsequent interest rate hikes will slowly bring that boom to an end, particularly for small businesses.
Narrative B
The economy is supposed to be cooling, but the US still faces a historically low unemployment rate. Both job openings and unemployment are supposed to go down together, which is why the Fed hiked rates again this week. Government policy right now is about bringing down inflation, and April's jobs report means the Fed will likely have to keep applying pressure.
