In this morning’s data, Initial Jobless Claims were 228,000 for the week ending May 3rd, slightly less than expected and 13,000 less than the previous week. In addition, Continuing Claims were 1,879,000 for the week ending Apr 26th, as expected, and 29,000 less than the previous week’s revised figure. Meanwhile, Nonfarm Productivity fell -0.8% in the preliminary reading for the first quarter, as expected. Unit labor costs in the preliminary reading for the first quarter grew 5.7%, higher than expected and above the revised figure from the previous period.
Both initial claims and continuing claims were slightly less than expected and lower than the previous week. Initial claims remain below the 300k level considered to be the top threshold for a healthy labor market. The slight reduction in continuing claims is welcomed, but they are still within the range established since last fall. The labor market continues to remain in check. In the preliminary reading for the first quarter, productivity fell for the first time since 2022. Despite some progress toward implementing artificial intelligence in working environments, we have yet to see its full impact on labor productivity. The slight increase in unit labor costs hints that inflation, while moderating, remains above the Fed’s targets.
Overall, with the labor market intact and the uncertainty regarding ongoing tariff negotiations, the Federal Reserve remains on hold with their interest rate policy as they stated in their comments following yesterday’s rate decision. The timing and results of tariff resolutions and how companies absorb those impacts will be key for the economy in the coming weeks.
In all, the yield on the 10-year US treasury is little-changed and equity futures are higher on reports of a trade agreement with the UK as we head into the market open.
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