April 2017 Jobless claims show the US economy chugging along
Note: I wrote this at 845AM ET but it didn’t go out until about 5PM. Apologies. Since I wrote this, Tim Duy has come out with a piece similar in tone. See his thoughts here. The GDPNow tracker mentioned below has been updated to 4.2%. Original piece below.
The latest figures on US jobless claims show that in the week ending April 29, seasonally adjusted initial claims came in at 238,000. That puts the 4-week moving average at 243,000, which compares favourably to 263,000 the year prior. Claims data are still consistent with an economy adding 200,000 per month, meaning we should expect a snap back from last month’s low figure when the US jobs numbers are released tomorrow.
Why this matters. The Fed took a pass on hiking rates this week but indicated that, “the slowing in growth during the first quarter as likely to be transitory”. Some recent economic data seem to confirm this. The ISM Services data were good, ADP employment was robust. The Atlanta Fed tracker was at 4.3% through Monday’s data, though that figure will moderate.
For the Fed to continue to believe the slowing was temporary to hike rates in June, we will need to see decent data from the employment market. Right now, the Fed is on course for three or four rate hikes this year. But that view is very much data dependent. The bias is to tightening. And the data will need to be consistently poor to get the Fed to pause.