U.S. Initial Unemployment Claims Rose Modestly in the Week Ending April 13

• US initial claims inched up 4,000 to 352,000 the week ending April 13, 2013, which was just slightly above market expectations for a 350,000 reading. The modest increase in the latest week followed an outsized 40,000 drop to an upwardly revised 348,000 (was 346,000) the week ending April 6 that still more than retraced a 31,000 surge to 388,000 the week ending March 30.
• The four-week moving average of initial claims, which better controls for weekly volatility, rose for a fourth consecutive week by inching up to 361,250 from 358,500 in the previous week. Continuing claims for the week ending April 6 declined by 35,000 to 3,068,000.
• The modest gain in initial claims retraced little of the drop the previous week and provided further reason to suspect that much of the outsized jump the last week in March reflected difficulties seasonally adjusting the weekly data around an earlier than usual Easter rather than underlying weakness. The modest upward trend in the four-week moving average may still be reflecting some effect from sizeable government spending cuts implemented in March, which are expected to have a dampening effect on economic growth and labour markets in the near term. With that said, the pace of claims remains consistent with stronger growth in payroll employment than the 88,000 gain in March, which may have reflected, in addition to fiscal restraint, some payback for the average 221,000 increase in the previous four months that looked too strong relative to economic growth. Our forecast assumes stronger employment growth going forward although we continue to expect the near-term pace of job growth will be constrained by the fiscal restraint.

Information contained in this report has been prepared by the Economics Department of RBC Financial Group based on information obtained from sources considered to be reliable. While every effort has been made to ensure accuracy and completeness, RBC Financial Group makes no such representation or warranty, express or implied. This report is for information purposes only and does not constitute an offer to sell or a solicitation to buy securities.

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