US: Labor market recovery is still struggling – Wells Fargo

The weekly jobless claims report showed lower-than-expected numbers on Thursday. The trend in filings is little changed over the past few weeks and suggests the labor market recovery is still struggling to regain traction, explained analysts at Wells Fargo. 

Key Quotes: 

“While jobless claims dropped last week, the overall picture is of a labor market recovery that is struggling to regain traction. Claims fell by 19K the week ending February 6, but the drop comes off of an upwardly revised figure the prior week.”

“Other data out this week point to a job market that is only muddling along. Small business hiring plans held at a seven-month low in January, while job openings according to the BLS’s JOLTS report have been stuck in a narrow range since July. Both series remain high relative to prior downturns and suggest demand for labor is holding up better than the steep drop in payrolls and elevated rate of jobless claims filings imply on their own. But, the pandemic's uneven effect across industries limits the near-term jobs recovery.”

“As COVID cases are better managed, however, we expect for the heightened degree of turnover in the labor market evidenced by the current level of jobless claims to subside and for hiring to improve markedly this summer.”