US: Labor market recovery is still struggling to regain traction – Wells Fargo

The modest increase in jobless claims, on top of a hefty upward revision to last week's data, suggests the labor market's recovery continues to tread water, said analysts at Wells Fargo. They look for the trend to improve more materially over March. 

Key Quotes: 

“Expectations for a modest decline in jobless claims were dashed this week, with initial filings edging up 13K. More troubling was the upward revision to the prior week's data. That said, initial claims totalled 861K versus expectations for a reading of 773K, in a clear signal that the labor market recovery is still struggling to regain traction.” 

“Next week's claims figures are likely to be suppressed by the unusually harsh winter weather much of the country is dealing with, but that generates the potential for a pop in claims the following week (the March 4 report covering the week ending February 27). However, we expect that the trend in layoffs will ease more noticeably over March.”

“Continuing claims for regular state benefits fell again the week ending February 6, but the drop was the smallest in five weeks, likely reflecting some recipients exhausting basic benefits as the pandemic has stretched nearly a year.”