Adding to recent concerns about the strength of the labor market, the Labor Department released its report on initial jobless claims in the week ended March 28th on Thursday, showing an unexpected increase in first time claims for unemployment benefits.
The report showed that initial jobless claims rose to 669,000 from the previous week's revised figure of 657,000. Economists had expected jobless claims to edge down to 650,000 from the 652,000 originally reported for the previous week.
With the unexpected increase, jobless claims rose to their highest level in over twenty-six years, reaching the highest level since the week ended October 2, 1982.
Peter Boockvar, equity strategist at Miller Tabak, said, This, on the heels of the very weak ADP report yesterday, certainly sets us up for a poor government payroll figure tomorrow.
Wednesday morning, Automatic Data Processing, Inc. (ADP) released its report on private sector employment in the month of March, showing a much bigger than expected decrease of 742,000 jobs following a revised decrease of 706,000 jobs in February.
The Labor Department also said that the less volatile four-week moving average rose 656,750 from the previous week's revised average of 650,250. With the increase, the moving average also rose to its highest level since October of 1982.
Additionally, the report showed that continuing claims in the week ended March 21st rose to another record high of 5.728 million from the preceding week's revised level of 5.567 million.
As mentioned above, the recent employment data is likely to raise concerns about the outlook for the Labor Department's monthly employment report, which includes government jobs.
Economists currently expect the Labor Department report to show that employment fell by 658,000 jobs in March following a decrease of 651,000 jobs in February. The unemployment rate is also expected to rise to 8.5 percent from 8.1 percent in the previous month.
However, Boockvar noted, The market action of late is evidence that participants are looking past this employment data and placing their chips on the 'worst is over' belief and the still worsening labor market is a lagging indicator.
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