More Jobless Claims Point to Shallow Recession By Tony Crescenzi RealMoney.com Contributor 5/15/2008 9:42 AM EDT

Jobless claims increased 6,000 to 371,000 in the week ended May 10, 1,000 more than expected. Despite the increase, the four-week moving average fell slightly to 366,000 from 367,000 the previous week, although that's still about 10,000 below the recent peak. (See last week's post to see what this relatively stable reading means as far as recession goes.)

These data will be seen as confirming other data giving the impression that the recession is not yet deep. These include the first-quarter GDP report, which now looks likely to be revised higher to a 1% gain instead of the 0.6% gain reported in the advance estimate, the ISM manufacturing and non-manufacturing indices, and the April employment report. The link between all of these data is the resilience of the service sector, at least relative to the goods sector.

In GDP, personal spending on services was reported to have increased at a 3.4% pace, the best in at least 10 years. The ISM's non-manufacturing index went above 50.0 (52.0) for the first time since December, and within the employment report, 90,000 service-producing jobs were said to have been added. The service sector is vitally important to the job market -- it represents 116 million of the 138 million jobs in the U.S.

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Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of the revised investment classic, The Money Market, first published in 1978 by Marcia Stigum, and The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.

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