US applications for unemployment aid drop sharply, a good sign before April jobs report

WASHINGTON – The number of Americans seeking unemployment benefits fell last week by the most in nearly a year. The figure was a hopeful sign one day before the government releases the April jobs report.

The Labor Department said Thursday that weekly unemployment aid applications fell 27,000 last week to a seasonally adjusted 365,000. The four-week average, a less volatile measure, ticked up to 383,500 last week.

Applications are a measure of the pace of layoffs. When they fall below 375,000, it generally suggests that hiring will be strong enough to lower the unemployment rate.

Last month, applications jumped after steadily declining since the fall. At the same time, hiring slowed. Those figures sparked concerns that the job market was worsening after strong gains during the winter. But some economists said temporary layoffs stemming from the spring holidays might have inflated benefit applications.

Last week’s drop reversed the increase during April. Applications are now roughly back at their level four weeks ago.

“These data are consistent with the notion that while the labour market is not as robust as December-February data suggested, neither is it in the process of falling apart,” said Joshua Shapiro, an economist at MFR Inc.

Other recent data have been mixed. A survey by payroll provider ADP, released Wednesday, said businesses sharply cut back on hiring in April.

A report earlier this week showed that the economy’s manufacturing sector expanded at the fastest pace in 10 months. Measures of new orders, production and exports rose. And a gauge of employment reached its highest level in 10 months.

On Friday, analysts expect the government to report that employers added 163,000 jobs in April, while the unemployment rate was unchanged at 8.2 per cent. That would be an improvement from March, when job growth slowed to just 120,000. But it would be below the average of 246,000 jobs a month added from December through February.

Many economists downplayed the weak hiring in March. They said a mild winter led employers to accelerate hiring in January and February. That made March’s job figures weaker.

ADP’s report said companies added only 119,000 jobs last month. The ADP report has deviated sharply from the government’s figures in the past and isn’t always a reliable indicator. For example, the government’s estimate of 120,000 jobs created in March was much lower than ADP’s estimate of 201,000.

Most economists said the ADP figures would not lead them to change their forecasts for job creation during April.

The number of people receiving benefits also declined. In part, though, that’s because some extended benefit programs are winding down. Nearly 6.6 million people received benefits during the week of April 14. That’s down from about 6.7 million the previous week.

The unemployment rate has fallen to 8.2 per cent in March from 9.1 per cent in August. Part of the reason was that some people gave up looking for work. People who are out of work but not looking for jobs aren’t counted among the unemployed.