Labor market news is mixed

Weekly unemployment claims last week were slightly higher than expected (383K vs. 370K), but that is well within the normal level of "noise" for this series. At worst, this could be a sign that the downtrend in claims is slowing; still, the unadjusted claims number was down 10.6% from a year ago, and that is a good thing.

This chart highlights what is arguably the most important (and positive) change on the margin in the labor market: the ongoing and significant decline in the total number of people receiving unemployment insurance. Over the past year, that number has declined by 17.6%; 1.22 million fewer people are receiving unemployment compensation checks today than were a year ago. This is significant because it creates meaningful changes in the incentives of workers looking for jobs—when you are no longer paid to be out of work, you are more likely to be searching harder and more likely to accept an offer that you might otherwise have turned down. Tracking changes in incentives is key to understanding the important changes on the margin in the economy. Moreover, we are likely to see more of this in the weeks and months to come, since a growing number of people will be exhausting their eligibility for emergency claims.

The May ADP estimate for private sector jobs growth was a little disappointing (133K vs. 150K), but it suggests that the BLS estimate of payroll changes in May will be up from April's level. Expectations call for the BLS to announce an increase of 160K for May, which is indeed better than April's 130K, but that would still reflect rather tepid jobs growth.

On balance, nothing to get really excited about, but then again there is nothing in these numbers to suggest that the economy is getting worse.