In the week that ended on the 16th of May, jobless claims rose by 10,000 to a seasonally adjusted 274,000. This still marked a 16% drop compared to a year-ago despite hitting a four-week high.
The average on new claims over the last month dropped 5,500 to 266,250 marking the lowest level since April of 2000, said the Department of Labor on Thursday. The 4 week average typically smooth’s out sharp fluctuations in the more choppy weekly reports.
After the U.S. economy fizzled out in the 1st quarter, the unusually low levels seen in layoff data may suggest an economic rebound. With most of the companies still holding onto their workforce, this is a clear indication that they expect the demand for goods and services to increase.
On the other hand, continuous jobless claims, which reflects the number of people who have already collected weekly unemployment checks, dropped by 12,000 to 2.2 million in the week ending 9 May. These claims have fallen steadily from a 6.6 million record on the back of the 2007-2009 recession.
Although it is evident that there are lower levels of jobless claims and layoffs, the economy in the U.S. is significantly different to what it was 15 years ago.
That is, there is a much smaller portion of the population in the workforce today. Participation rates, as they are known, are at 62.8%, compared to 67 percent at the beginning of 2000. Said differently, less than 63 out of 100 able-bodied Americans that are 16 years or older are in the workforce today.
Many of the baby-boom generation workers are now retiring; however, the participation levels for younger people is below the norm. This signals that jobs, particularly good ones, are still scarce and probably harder to find than in the prime of the economy.
A so-called skills mismatch is an added explanation. Business people keep complaining that lots of job applications lack the required skills, or at least in the hiring regions.
Helping to explain why the Fed continues to keep the interest rates near zero in the short-term is the remaining problems in the labor market. Although lots of positive signs of improvements are shown, the Fed would prefer seeing continuous wage growth and further job gains, before acting.