May 7, 2021 - Economy

New pandemic low in unemployment claims bodes well for jobs report

Data: Department of Labor; Chart: Axios Visuals
Data: Department of Labor; Chart: Axios Visuals

First-time unemployment claims fell again, the Labor Department reported Thursday, with seasonally adjusted claims falling below 500,000 for the first time since March 2020, and unadjusted claims showing a decline of more than 107,000 from the previous week.

Why it matters: It's the latest sign of a strengthening labor market and could set the stage for a big jobs report on Friday.

What we're hearing: Economists like the Jain Family Institute's Claudia Sahm and Jefferies' Aneta Markowska expect the report could show more than 2 million jobs were added last month.

Yes, but: Wednesday's ADP private payrolls report missed expectations, coming in at 742,000 jobs added, well below expectations for 896,000.

  • Similar employment metrics like the ISM and IHS-Markit surveys did not show blowout job gains last month.

Watch this space: "In this era, there’s been more uncertainty than ever before, so I wouldn’t hang my hat on any number," former Department of Labor chief economist Heidi Shierholz tells Axios.

  • Still, Shierholz, now senior economist at EPI, is expecting, "We will get a strong number... things will look good."

By the numbers: The April nonfarm payrolls report is expected to show 975,000 jobs were added, which would be the highest print since August's 1.58 million.

  • The unemployment rate is expected to fall to 5.8% and average hourly earnings are expected to be unchanged from March (and down 0.2% year over year) after last month's 0.1% contraction.
  • That was driven by an increase in lower-paying jobs in the service industry returning.
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