US weekly initial claims rise unexpectedly, but labour market recovery gathers steam

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US weekly initial claims rise unexpectedly, but labour market recovery gathers steam

On Thursday, US Labour Department said at its weekly initial jobless claims report that the number of Americans filing for first-time state unemployment benefits rose marginally last week, an unexpected downfall in US labour market which appears to have undermined a rapidly progressing labour market recovery as more US states were reportedly considering a re-opening of their economies with massive fiscal stimulus chipping in.

More surprisingly, the latest unexpected uptick in US initial jobless claims that seemingly had bolted out of the blue, had not been in alignment of a flurry of upbeat economic data released over recent weeks, as Labour Department’s non-farm payroll data had unveiled later last week that the economy had added 916,000 jobs in March, the strongest level in seven months, while JOLTS data had unfurled that US job openings surged to a two-year peak in February, eventually leading to analysts’ belief that the latest initial jobless claims data might have understated a rapidly recovery in labour market.

US weekly initial jobless claims rose marginally last week

In tandem, according to US Labour Department data released earlier in the day, the number of Americans filing for state unemployment benefits for the first time in their lives rose 16,000 to a seasonally adjusted 744,000 during the week that ended on April 3, while data for prior week had been revised higher by 9,000 claims.

Meanwhile, blaming a seasonal adjustment ahead of a new quarter behind the recent uptick in jobless claims, a Chief US economist at Barclays in New York, Michael Gapen said, “We suspect that the seasonal adjustment process is the main culprit behind the confounding volatility in claims data in recent weeks as the economy passed the one-year anniversary of the lockdowns from last spring”.

Nevertheless, an increase in initial jobless claims last week was mostly led by the US state of California and New York, while there had been a substantial scale of decline in Alabama, Georgia and Ohio, suggesting a robust opening of second quarter for US labour market despite a gloomier initial claims data.