Weekly demands without work are higher than expected

Initial claims for unemployment insurance rose more than expected last week, despite other signs of healing in the labor market, the Labor Department reported on Thursday.

Initial claims for the week ended April 3 amounted to 744,000, well above the expectation for 694,000 of economists interviewed by Dow Jones. The total was an increase of 16,000 compared to the previous week’s revised 728,000. The four-week moving average rose higher to 723,750.

The news comes a week after a sign of more aggressive healing in the labor market as non-farming payrolls rose by 916,000 in March, while unemployment fell to 6%.

This was the largest job gain since August 2020, although unemployment remains well above the 3.5% low before the pandemic.

Continued demands provided good news to the labor front, with the total drop from 16,000 to 3.73 million. This is the lowest level for continuing claims since March 21, 2020, just after the Covid-19 pandemic hit and companies instituted major layoffs along with the economic strike. Continuous claims run a week behind the weekly number.

A year ago it was only 3.44 million, but rose shortly afterwards due to massive layoffs in late March and early April.

According to the unadjusted data, California and New York accounted for most of the increase in jobs, with increases of 38,963 and 15,714, respectively. These increases were somewhat offset by a decrease of 13,944 in Alabama and 10,502 in Ohio.

Economists said the submission of backlogs could be a factor affecting the stubbornly high claims rate, while the peaks in Covid cases could also hold the increases for some states.

Markets reacted little to the data, while equity futures and government bond yields were mixed.

Despite recent progress, Federal Reserve officials say much more progress is needed on the job front before they think about changing policy.

Minutes of the recent meeting of the Federal Open Market Committee, which was announced on Wednesday, indicate a better outlook for the economy, although there is an ongoing need for easy policies.

Fed Gov. Lael Brainard told CNBC on Wednesday that the outlook for the economy has “significantly improved”, but there are still about 9 million fewer workers than before the pandemic. Central bank officials said they not only want to see full employment, but also want inclusive gains across incomes, races and gender boundaries.

“In that sense, we still have a long way to go before the outcomes are reached,” Brainard said.

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