First-time unemployment benefit claims make a steep drop

(Rachel Maddow Blog) After three weeks of higher numbers, first-time applications for unemployment last week returned to the level analysts have considered a positive sign for the job market.

For the week ending April 28, the Department of Labor reported Thursday, seasonally adjusted initial claims was 365,000. This is well below the consensus of experts surveyed earlier this week and a decrease of 27,000 from the previous week's revision of 392,000. (Before the revision, that number was 388,000, and it is likely Thursday's number will be revised upward slightly, too, as that has been the case every week of 2012.)

The four-week moving average, which analysts favor because it flattens volatility in the weekly number, rose to 383,500, up 750 from the previous week's revised average of 382,750.

For the week ending April 14, the total number of Americans claiming benefits in all programs, including federal emergency extensions, was 6,597,492. That was a decrease of 85,523 from the previous week. That number will fall sharply between now and September as the government reduces the weeks of benefits in the states hardest hit by joblessness from 99 to 63.

First-time claims will have no impact on Friday's monthly jobs report from the Bureau of Labor Statistics. Only data collected until mid-month are included in that report.

Analysts are looking toward the BLS report with some trepidation because last month's numbers declined to less than half the average of 246,000 net new jobs created in the previous three months. Their worries were exacerbated by Wednesday's release of the  report of private sector job growth by payrolls-processor Automatic Data Processing Inc. That figure was just 119,000, far below expectations and far below ADP's report for March, the weakest gain since September. The ADP numbers often are no match for those in the BLS report, but generally reflect the same up or down trend.

Employment in the private, service-providing sector increased a seasonally adjusted 123,000 in April, according to ADP, after rising 158,000 in March. Employment in the private, goods-producing sector declined 4,000 jobs in April. Manufacturing employment dropped 5,000 jobs, the first loss since September of last year.

'This deceleration seems consistent with other incoming data,' said Joel Prakken, chairman of Macroeconomic Advisers, which produces the report for ADP. 'There is some evidence that unusually warm weather boosted employment during the winter months, with a 'payback' now coming due.'

Prakken said the reduced level of private-sector growth makes it unlikely that the official (U3) unemployment rate declined, unless the labor force shrank significantly.

The BLS report will likely do much to shape perceptions of where the jobs market is headed for the rest of the year. The key question: Was the plunge in March a fluke, a one-off in a general upward trend in job creation, or was it the onset of a new trend? Economists are forecasting 162,000 seasonally adjusted jobs were created in April. That's well below the average for December-February, but a far better showing that the 120,000 net new jobs the BLS said were created in March.

Another weak showing would add to worries spurred by the report last week that the gross domestic product grew at an annual rate of just 2.2 percent for the first quarter of 2012, down from 3 percent the previous quarter.

While data remain mixed'for instance, manufacturing was up significantly last month but factory orders were down'the jobs figures are the ones that have given analysts their biggest concern that the economy is losing steam.

All this matters most for millions of Americans hoping to get a job nearly three years after the Great Recession was officially declared over. But it also matters because of perceptions among voters just as the presidential race gets underway in earnest. Rising unemployment could be a big problem for Barack Obama and the Democrats despite the fact Republicans have no credible record on job creation and the presumptive GOP presidential nominee was in the business of whacking jobs when he was at Bain Capital.