- While April’s jobs report was a huge miss, unemployment claims have fallen for weeks, and just did again.
- Other positive signals suggest the April data could be revised higher – and hiring is stronger than it seems.
- Hiring could rebound as barriers like childcare and low wages are reversed, economist Robert Frick said.
- See more stories on Insider’s business page.
There’s whiplash in the labor market.
Friday’s jobs report was, by nearly all measures, a huge disappointment. Payroll growth was roughly one-quarter of what economists anticipated, the unemployment rate rose, and several sectors shed jobs while roughly 10 million Americans remain unemployed. So how does that square with today’s news that unemployment claims just notched another pandemic-era low, the fourth in five weeks?
April’s number was likely just that: one number. The payrolls sum will most likely be revised in the next monthly release, and a handful of signals suggests the April reading was an abnormal blip amid otherwise encouraging trends in hiring.
The April jobs report already contrasted with payroll data from firms including Kronos, Homebase, and OpenTable, Aneta Markowska, chief economist at Jefferies, told Insider on Friday. Tumbling claims only further isolate the jobs report.
“If we see claims continuing to move down, to me, that will be kind of confirmation that this April employment report was a fluke,” Markowska added.
Several other hiring signals are stronger than April’s jobs report
The details of the respective reports shine some light on how the labor market is really faring. While payroll growth sharply decelerated in April, average hourly wages shot higher. Separately, data published on Tuesday showed job openings soaring to a record-high 8.1 million in March, signaling strong demand for workers.
With several businesses rolling out higher wages to attract workers, hiring is expected to bounce back as jobless Americans face stronger incentives to work.
“With demand for workers high and layoffs relatively low, we should see strong hiring in the months to come, as barriers to employment, such as lack of childcare, lessen,” Robert Frick, corporate economist at Navy Federal Credit Union, said. “For many, especially low-wage workers, returning to a job is a puzzle in which several pieces, such as childcare, transportation, wage levels, and benefits must fall into place.”
The jobs report also only covers part of each month, leaving room for revisions to lift the April count. The government’s payrolls survey uses employers’ pay periods that include the twelfth day of the month. The household employment survey – which also factors into the jobs report – uses a calendar week as its reference period, typically picking the week that includes the twelfth day of the month.
Jobless claims have also fallen considerably since those reference periods ended. Claims totaled 566,000 for the week that ended on April 17. They’ve since fallen to 473,000 and show a strong downward trend.
Others see the conflicting reports hinting at a shakeup taking place in the labor market. The April payrolls read and steady decline in jobless claims aren’t at odds with each other; instead, the data point to job losses declining and many Americans re-entering the workforce, Cailin Birch, global economist at The Economist Intelligence Unit, said.
“We expect the headline unemployment rate to remain elevated, at around 6%, for much of the second quarter as more and more discouraged workers begin seeking employment again and new job creation moves at a gradual pace,” she added.
Business Insider Emails & Alerts
Site highlights each day to your inbox.