Weekly initial jobless claims fell from an upwardly revised 416,000 in the prior week to 403,000. The 4-week moving average edged up 2,250 to 399,000, and continuing claims slipped by 7,000 to 3.70 million.
After settling below 400,000 in much of February and March, the progress in claims appears to be stalling out. A kink in the supply chain caused by the earthquake in Japan may be responsible for much of the recent uptick, and if that's the case, growth may moderate some in the coming months.
Economic growth could also be plateauing amid lackluster consumer confidence and a general uncertainty that still prevails following the steep recession and generally slow pace of job creation.
An unexpectedly sharp drop in the sometimes volatile Philly Fed Business Activity Index (see chart below) released today may also be foreshadowing a modest deceleration in activity, and I suspect some of the supply-chain issues connected with Japan could temporarily cool the red-hot manufacturing sector.
But I’m cautiously optimistic that the economic recovery is intact, especially given the recent uptick in job creation and confidence investors have been displaying in stocks.
Despite a surge in gasoline prices, uncertainty in the Middle East and the earthquake in Japan, shares have blown past economic headwinds and are flirting with multiyear highs, suggesting that investors are confident that revenues and profits will continue to improve at the nation’s largest companies in the coming months.
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