U.S. weekly initial jobless claims fall considerably, further employment gains likely in 2017

Initial jobless claims in the U.S. dropped considerably in the week ended 29 April. Jobless claims dropped 19,000 to 238,000, reversing slight weakness that was seen emerging last week. The figure is below consensus expectations of 248,000. After reaching a low point of 227,000 in early February, initial claims data have moved between the low 230s and the low 260s.

Within this range, the data is viewed as supportive of employment growth and suggests relatively strong underlying activity. Continuing claims stayed below 2 million in the week ended 22 April, dropping modestly to 1.964 million. The insured jobless rate continued to be at 1.4 percent, matching its lowest reading in the current recovery. Larger than normal declines in New York, New Jersey, Massachusetts and Ohio mainly drove the drop in initial claims. New York State alone saw a drop in claims of 11,000 on the week.

Overall, continuing and initial claims data affirm the scenario of a healthy labor market that is slightly through full employment. In spite of a weak payroll employment number in March, the labor market continues to be strong and there is no pattern in the underlying state data to provide a pause on that assessment, stated Barclays in a research report.

“We expect a rebound in April employment (225k) and expect further employment gains this year of about 175k per month”, added Barclays.