With Weekly Jobless Claims At Lowest in 54 Years Could the Fed Hike Interest Rates Faster?
In the week ending April 2, the advance figure for seasonally adjusted initial claims was 166,000, a decrease of 5,000 from the previous week’s revised level, according to the Labor Department. This was also the lowest level since November 1968, according to Bloomberg. The previous week’s level was revised down by 31,000 to 171,000 from 202,000.
Economists polled by the Wall Street Journal had forecast initial jobless claims to total a seasonally adjusted 200,000 in the seven days ended April 2, according to MarketWatch. The Labor Department also said that as of next week, it will change how it estimates jobless claims back to the procedure it used to use before the pandemic.
Jeanniey Walden, CMO of DailyPay, told GOBankingRates that “if you thought there was little room left for jobless claims to fall, then take a look at this morning’s shocking report. Thanks to a dramatic change in its seasonal adjustment methodology, the Bureau of Labor Services reported 166 thousand initial claims, the lowest number in 45 years and well below the 200 thousand floor it had previously been sitting atop.”
Seasonal adjustments have long been more criticized than understood and the BLS states it is simply withdrawing a pandemic “multiplicative model,” an explanation that will surely satisfy no one outside the most ivoried of economic towers, she added.
“Regardless, this data is more ammo for James Bullard, the lone FOMC member to call for a 50 basis point hike last month and who is also speaking this morning on, you guessed it, the state of the economy,” she said. “Already, there seems to be a shift in “Fedspeak” with Lael Brainard sounding increasingly hawkish yesterday, calling for a rapid reduction in the Fed balance sheet and sounding more open to larger rate hikes.”
So what’s changed since the Fed meeting just three weeks ago? “Further jobs strength and an increasing concern that inflation will not moderate, absent more aggressive Fed action,” she said.
The figure also underscores how far the job market has recovered. Indeed, for the corresponding week a year ago, claims were standing at 645,000, according to Labor Department data.
The 4-week moving average was 170,000, a decrease of 8,000 from the previous week’s revised average. The previous week’s average was revised down by 30,500 from 208,500 to 178,000.
California, Pennsylvania and Oklahoma saw the largest increases in claims for the week, while Michigan and Texas saw the largest decreases.
The largest increases in initial claims for the previous week, ending March 26, were in Ohio (+3,580), Michigan (+3,545), California (+3,256), Texas (+2,251), and New York (+761), while the largest decreases were in Kentucky (-2,034), Pennsylvania (-732), Tennessee (-235), Florida (-165), and Connecticut (-138).
This follows March’s total nonfarm payroll employment, which rose by 431,000 in March, below analysts’ expectations and significantly lower than February’s 678,000, the Bureau of Labor Statistics (BLS) reported on April 1. Notable job gains continued in leisure and hospitality, professional and business services, retail trade and manufacturing.