Jobless Claims Decline, LEI Rises: U.S. Economic Takeaways

  • Applications for unemployment benefits lowest in four decades
  • Leading economic indicators index rises less than forecast

What you need to know about Thursday’s U.S. economic data:

JOBLESS CLAIMS (WEEK ENDED APRIL 16)

  • Fell by 6,000 to 247,000 (forecast was 265,000), lowest since November 1973
  • Continuing claims decreased to 2.14 million, fewest since November 2000, from 2.18 million
  • Initial claims four-week average dropped to 260,500 from 265,000

The Takeaway: Jobless claims are on a hot streak. Filings last week were not only the fewest in more than 42 years, they’ve also been below 300,000, a level economists associate with a robust labor market, for 59 straight weeks. Even better news is that the decrease occurred during the week when the government surveyed for the April employment report. When claims are compared to the size of the American labor force, “this appears to be the least likely period for an existing worker to be fired in the last half-century,” Michael Shaoul, chief executive officer of Marketfield Asset Management in New York, wrote in a note to clients. The labor market is by far the strongest part of the economy, as measures of manufacturing, consumer spending and overall growth have deteriorated. While indicative of weak productivity -- companies are using more bodies to meet demand instead of investing in efficiency-boosting equipment -- persistent hiring will be an important component in drawing the economy out of its recent slowdown.

INDEX OF LEADING ECONOMIC INDICATORS (MARCH)

  • Rose 0.2 percent (forecast was 0.4 percent) after 0.1 percent decline (revised from 0.1 percent gain)
  • Six of 10 leading indicators improved in March
  • Index restrained by fewer building permits
  • Coincident index unchanged after 0.1 percent gain

The Takeaway: A healing of financial conditions, including a rebound in stocks and still-favorable interest rates, helped the leading gauge climb for the first time in four months. Nonetheless, the improvement was less than forecast. While jobless claims weighed on the index that’s designed to project economic activity three to six months out, more recent data have shown a decline in Americans filing for unemployment benefits. The March reading was especially held back by a plunge in the building permits index at the start of the housing market’s spring selling season.

BLOOMBERG CONSUMER COMFORT (WEEK ENDED APRIL 17)

  • Fell to 42.9 from 43.6
  • Monthly economic expectations improved to three-month high of 44.5 from 42
  • Weekly gauge reflected drop in current attitudes about U.S. economy

The Takeaway: The robust job market is doing little to rekindle sentiment, probably because wage growth isn’t up to snuff. Household attitudes about the economy are in a state of flux -- not so sanguine about its current state but a tad more upbeat about the outlook. While still cheap by historical norms, the rise in prices at the gas pump since February probably isn’t helping either. Until confidence picks up, the outlook for consumer spending will probably be more of the same -- modest improvement.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE