The major U.S. stock indexes are climbing, but the critical U.S. jobs market continues to languish and that's a reason investors should worry.
The weekly initial jobless claims data, which measure the number of people who have filed for unemployment benefits for the first time, have not shown improvement for the past three months.
Initial jobless claims for the week of March 13, which are scheduled for release today, are forecast at 455,000, compared with 462,000 during the previous week.
"It's surprising that we have not seen improvement in initial claims," said Mark Zandi, chief economist with Moody's Economy.com.
The data suggests that the recovery in the economy has stalled.
"It's hard to see how we will see substantive jobs growth until those claims are reduced. It worries me that jobless claims are not coming down."
What are the expectations? Although the unemployment rate appears to have peaked, initial jobless claims are still well above levels consistent with the stabilization of the job market, said economists with UBS Securities LLC in a report to clients.
"We think they probably have to fall to around 425,000."
The lacklustre recovery in the U.S. jobs market is one of the key reasons the U.S. Federal Reserve Board is holding interest rates down, economists say.
"That's exactly the kind of thing we are trying to highlight," said Paul Dales, the U.S. economist for Capital Economics Ltd.
"We think the economic recovery is going to be subdued," he said.
The financial markets, on the other hand, are looking for a robust recovery that typically occurs during the two years following a recession, he said.
Although Capital Economics forecast the U.S. economy will grow by 3 per cent in 2010, it is looking for growth of only 1.5 per cent in 2011.
"That will be very disappointing to the markets," Mr. Dales said.
"Employment doesn't tend to be a leading indicator, but it has been lagging a bit," said Pascal Gauthier, an economist with TD Securities Inc.
There has been a reluctance by firms to hire, but he expects the jobs picture will improve in the second quarter as a result of hiring for the U.S. census along with private-sector hiring.
"I think the tide should turn in the spring," he said.
"You probably have to get down to 400,000 [claims]for sustainable growth. That's a reasonable target, but we're certainly not there yet."