Jobless Claims—A Good Sign or a Weather Fluke?
The employment picture does seem to be improving but economists say some of the labor market's gains may be the result of unusually warm winter weather.
Based on weekly jobless claims, the February jobs market is bearing out to look very much like January, which saw 243,000 net new jobs and the unemployment rate at 8.3 percent, down from December’s 8.5 percent.
Thursday’s weekly jobless claims were unchanged at 351,000for the week ending Feb. 18, the same week that the Bureau of Labor Statistics will use for the February monthly employment report survey week. Continuing claims fell by 52,000, to 3.4 million, with the four-week average falling to 359,000, its lowest level since March 2008.
“[The] bottom line is claims have been improving. The trend in layoffs is improving. That tells you firms are more optimistic about the outlook and they continue to lower the amount of cost cutting,” said Credit Suisse economist, Jonathan Basile.
While that’s a good sign, Basile said it may be some time before the trend can be trusted as signs of a sustainable jobs recovery.
“We do know this is a very warm winter, and in recent months, there’s been a lot more construction jobs showing up than usual," said Basile. "These are the times of year when there are construction layoffs. I think we’re going to have to get through the March, April, May data to sort out whether this strength in jobless claims is a weather phenomena or a fundamental move."
Economists at Barclays Capital said they are now looking for a total nonfarm payroll addition of 225,000 jobs in February and a decline in the unemployment rate to 8.1 percent. The February employment report will be released March 9.
The economists note that the ongoing improvement in the weekly claims data and other indicators indicates improvement in private employment across a variety of sectors.
But they also note: “Favorable weather conditions are also likely to support hiring in construction-related sectors.” They also see federal and state governments continuing to cut jobs.
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