First-time U.S. jobless claims last week unexpectedly fell to the lowest level in more than five years, a positive sign for the economy, but the good news could be tempered by weak job growth, according to new data and experts.
In the week ending April 27, initial claims for unemployment benefits tumbled to 324,000 nationwide, the fewest since 321,000 for the week ending on Jan. 19, 2008, according to seasonally adjusted data from the U.S. Department of Labor.
In Ohio, initial claims for unemployment benefits has declined year-over-year, but remain distressingly high, some experts said. Sequestration threatens to increase job cuts, especially in the Dayton region.
New jobless claims reflect layoffs, and the national decline suggests the labor market is healing. But March had the worst job growth in 10 months, and experts are worried that the economic recovery’s slowdown may have continued in April.
“We can have fewer layoffs going on in the economy, which could cause the jobless claims to drop, and simultaneously, other firms are just not increasing their hiring,” said William Even, the Raymond E. Glos professor of business with the Farmer School of Business at Miami University. “I would be more excited about a big jobs number than a big drop in the number of new claims for jobless benefits.”
Across the nation, new claims for unemployment benefits for the week ending on April 27 fell 18,000 from the prior week and 31,000 from the week before that, labor data show. Initial claims were down 13 percent from the same week the previous year.
U.S. employers laid off 23 percent fewer workers in April than in March, with job cuts falling to 49,255, according to Challenger, Gray & Christmas, a global outplacement consultancy firm based in Chicago.
Retail saw the largest number of layoffs (5,897), but aerospace and defense firms announced 2,927 job cuts, two-thirds of which were attributable to federal spending cuts and sequestration concerns, according to Challenger. The Dow Jones reported the largest retail job cut in April resulted from the closing of the Sears Holding Corp. and Walmart portrait studios, operated by CPI Inc. It noted the portrait studios demise was attributed to the popularity of digital photography from smartphones and tablets.
But most private-sector firms have not been significantly impacted by sequestration yet, because government contracts are usually assigned long in advance and some are close to completion, John Challenger, the firm’s chief executive office, said in a prepared statement.
“However, as we can see by early job cutting activity, companies are already taking steps to address the impact of future spending cuts,” he said.
In the Dayton region, the heavy concentration of jobs tied to Wright-Patterson Air Force Base explains why initial unemployment claims crept upward to 717 last week, said George Zeller, an economic research analyst in Cleveland. The data is for Clark, Greene, Miami, Montgomery and Preble counties.
The number of jobless claims can be volatile week to week, and Zeller said he uses a four-week running average to “smooth out” the data.
Last week, Ohio had 9,918 new unemployment claims, which was down 1.6 percent from the same period in 2012, but 24 percent higher than in 1999, the last time the state enjoyed robust and sustained job growth, according to Zeller’s analysis.
The state has seen three consecutive weeks of year-over-year declines in initial jobless claims, said Ben Johnson, spokesman for the Ohio Department of Job & Family Services.
The national decline in layoffs could be overshadowed by April’s employment data, which will be released today.
Employers in March added only 88,000 jobs, the lowest level since June 2012, and less than half the gains some economists predicted.
ADP, a payroll processing firm, announced earlier this week that private firms added about 119,000 jobs in April, the lowest since September.
A second month of very weak job gains could signal a major slowdown, and not just a temporary setback, for the economic recovery.
“You need about 150,000 new jobs each month just to absorb the new people coming into the labor market because of population growth and immigration,” said Even, with Miami University. “The 90,000 jobs last month was bad.”