The stars are aligning for an improving economy — as long as you ignore the biggest star of them all.
Most of this week’s economic data continue to point to a recovery: the Philly Fed index increased and has remained positive for six straight months; industrial production rose again; NY Fed’s manufacturing survey showed improvement and the Conference Board’s index of leading indicators rose for 10th consecutive month.
“Perhaps the economy is approaching a point at which employers suddenly conclude that the recovery is for real and start hiring, generating new momentum for the expansion,” The Economist’s Free Exchange blog writes. “But it is strange to see recovery this persistent and this strong, with so little new job creation.”
That’s the one, big out-of-alignment star. And perhaps the gains in the other numbers aren’t so strange when considering the severely depressed levels from which most of them are recovering, which still leaves them well below levels considered “normal.”
The jobs market still isn’t pretty, and today’s weekly jobless claims data proves that point. Claims jumped 31,000 to 473,000 last week, much higher than economists were expecting. Not a good sign, especially since that number needs to get closer to 400,000 for the economy to start adding jobs again.
And as Paul noted earlier, claims for emergency unemployment benefits hit another high. When Miller Tabak’s Dan Greenhaus adds up initial, continuing and emergency claims, he says they total a record-high 10.56 million.
Granted, the economy’s not losing 700,000 jobs a month anymore. But these are still some alarming statistics and should put any recovery pumpers on guard.
Weekly jobless claims also have now risen in three out of the last four weeks. While they tend to be volatile, it seems like this data point may be setting up for an extended period of sideways action between 450,000 and 500,000, James Picerno writes at The Capital Spectator. “If so, that spells trouble for expecting a robust rise in nonfarm payrolls any time soon,” he says.
“The problem, of course, is that the recovery so far has been virtually all about slowing the bleeding,” he adds. “The second phase of net job creation has yet to begin, and based on today’s numbers there’s reason to wonder if the day of salvation is further down the road than we thought a few months back.”