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THURSDAY IS FRIDAY'S WARM-UP ACT: LABOR MARKET DATA PRIMES THE PUMP

Investors were fed a variety of economic indicators on Thursday, including some appetizers to chew on ahead of Friday's jobs report.

Last week, an even 200,000 U.S. workers joined the queue outside the unemployment office USJOB=ECI, a 5.3% weekly increase, and 5,000 fewer than analysts expected.

Ironing out weekly volatility, the four-week moving average of initial claims has a slight downward bias, hovering along the lower end of the range associated with healthy labor market churn.

Is the labor market idling in low-hire, low-fire mode?

The consistently low number of applications for unemployment insurance would seem to belie a recent spate of layoff announcements.

On that subject, outplacement firm Challenger, Gray & Christmas (CGC) USCHAL=ECI reports U.S. firms announced 83,387 layoffs in April.

That's up 38% from March, but 21% fewer job cuts than were announced a year ago.

Still, it marks the third-highest April reading in the past 15 years.

There have been a total of 300,749 layoffs announced so far in 2026, or roughly half of 2025's January-April total.

The biggest slice of the layoff pie belongs to technology firms, which have cut 85,411 jobs so far this year, or 28% of the total. That's a 33% year-on-year increase and the highest year-to-date total for the sector in three years.

"Technology companies continue to announce large-scale cuts and are leading all industries in layoff announcements," writes Andy Challenger, workplace expert at CGC. "They are also often citing AI spend and innovation."

Continuing jobless claims USJOBN=ECI, reported on a one-week lag, dipped by 0.6% to 1.766 million, or 34,000 shy of consensus.

The dip jibes with consumer confidence data: laid-off workers are still finding it difficult to find a replacement gig, but that outlook has become slightly less gloomy over the last two months.

"The latest jobless claims figures show a labor market that’s more than holding its own despite over two months of conflict with Iran," says Nancy Vanden Houten, lead U.S. economist at Oxford Economics. "The oil price shock could still have some spillover effect on the labor market, but for now the Fed should feel comfortable leaving interest rates steady for an extended period while it monitors inflation."

The Labor Department also tossed in its initial take on first-quarter labor costs and productivity.

In the January-March period, unit labor costs USLCP=ECI -- which gauge the average cost of labor per unit of output produced -- increased by 2.3% at a quarterly annualized rate, cooler than the 2.6% increase predicted by economists, and pulling back from Q4's 4.6% surge.

Productivity USPROP=ECI -- which measures average output per hour -- printed at 0.8%, half of Q4's 1.6% pace and weaker than the 1.0% consensus.

"Solid productivity growth is restraining growth in unit labor costs, providing encouragement that underlying inflation will eventually drop back to the Fed’s 2% target once the shock from tariffs and higher energy prices has worked its way through the economy," says Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.

All of the above is prologue to the Labor Department's employment report due tomorrow, which is expected to show the U.S. economy added an unimpressive 62,000 jobs in April, with the unemployment rate repeating March's 4.3% print.

Next, expenditures on construction projects USTCNS=ECI increased by 0.6% in March, triple the rate economists predicted.

That's the biggest monthly increase since February 2025.

A peek beneath the hood of the Commerce Department's report reveals spending on residential projects -- the tentpole of construction spending in months past -- rose by 1.7% and has increased by 3.6% from a year ago.

Outlays by the private sector increased by 0.8% on a monthly basis and 1.0% year-on-year.

By contrast, spending on government-funded projects dropped 0.2% from the prior month but increased 3.6% year-over-year.

(Stephen Culp)

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