ADP and jobless claims show a tightening job market

The jobless claims report released this morning shows a labor market that is supportive of continued growth. Combined with a much better than expected 250,000 increase in private payrolls in the ADP report, the claims data give us every reason to be optimistic about tomorrows jobs report.

The seasonally-adjusted 250,000 figure for people filing an initial claim for unemployment insurance brought the 4-week average down to 241,750, which is at the very lower end of historical numbers over the last 4 decades.

However, because qualification for a claim has changed over the years, I tend to discount the actual level and look more at the change in the level to gauge the economic impact. And here again, the numbers look good, as claims continue to be at or below year-ago levels.

The beat on the ADP figure and the continued low level of jobless claims augurs well for tomorrow’s jobs report. Right now the consensus estimate for the report is for an increase of 190,000 in non-farm payrolls with the unemployment rate remaining unchanged at 4.1%. From a policy perspective, this should be enough to leave the Fed on track for two more rate rises by early summer.

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