What Can Initial Jobless Claims Tell About US Economy?

The number of Americans filing new unemployment benefits remained low last week, indicating a tight labour market that should continue to support the economy in the second quarter.

However, economists dismissed data from the Labour Department showing growth in worker productivity almost stalled in Q1, arguing that the trend in productivity remained solid. They also argued that there was a seasonal quirk that tended to bias gross domestic product and productivity lower in the first quarter.

The sharp slowdown in productivity and surge in labor costs would raise concerns about inflation pressures and squeezed profit margins, impacting demand for labor.

Fears are misplaced. Initial claims for state unemployment benefits were unchanged at a seasonally adjusted 208,000 for the week ended April 27, with economist forecast 212,000 claims in the latest week.