Big drop in jobless claims: this week in the economy

A bigger-than-expected drop in jobless claims might mean the employment picture isn't as bleak as thought. But retail sales disappointed, and consumer sentiment is still gloomy.

After disappointing unemployment figures for March, an unexpected drop in the number of people applying for jobless benefits last week was a welcome surprise.

Initial claims for unemployment benefits fell by 42,000, down to a seasonally adjusted 346,000 claims, according to the Department of Labor. It was the largest weekly drop since November 2012. This was an encouraging sign for many analysts, who took it as a signal that recent jobless claims reports, which have been higher than expected, could be the result of fluctuations in seasonal hiring and a modest slowing in the labor market, rather than an outright stall in hiring.

The four-week moving average of jobless claims, which smooth out the week-to-week volatility, rose modestly from 355,000 to 358,000.

"This is higher than the near-term low," Cooper Howes of Barclays Research wrote in an analysis, "and is consistent with our view that growth will slow in Q2 after a strong Q1."

Here are the results of other key economic reports from this week:

JOLT (Job Openings and Labor Turnover) at post-recession high in February: The BLS reported that 3.9 million jobs were open in February, the highest number since May 2008. The trade, transportation, and utilities sectors did the bulk of the hiring in the private sector. Health care and education saw a decrease in employment. 

Retail sales disappoint: Retail sales fell 0.4 percent in March, according to the US Census Bureau. Analysts expected them to remain flat, but lower gas prices, bad weather, and retailers cutting jobs all contributed to the decline. The drop comes after an unexpectedly strong start to consumer spending this year, which was expected to weaken after the expiration of the payroll tax holiday. It was the biggest drop in nearly nine months.

"Early on, there were indications that households were weathering the storm and pushing forward unfazed with their spending habits. That changed in March," said Jim Baird, partner and chief investment officer for Plante Moran Financial Advisors, told CNNMoney.

Consumers aren’t optimistic: Consumer sentiment seems to be in line with consumer actions, after a few months of falling sentiment and improving sales. The Thomson Reuters/University of Michigan's preliminary reading of the overall Consumer Sentiment index fell to 72.3 in April, its lowest level since July 2012. The Congressional Budget Office has predicted that the effects of the sequester may be catching up with the economy, and that it could shave 1.5 percentage points off economic growth figures this year.