Initial jobless claims retreated sharply last week, delivering a timely reprieve from the increases in previous weeks–increases that were beginning to look troubling, if they persisted. They haven’t, at least for now. New filings for jobless benefits dropped a sizable 42,000 last week to a seasonally adjusted 346,000. Once again, the latest claims data is within shouting distance of the post-recession low of 333,000, which was set back in mid-January. Is today’s report a sign that the previous runup in claims was just another case of noise for this volatile series? Possibly, although more convincing evidence will take several more weeks of updates.

For now, it’s safe to say that the previous sign of trouble in the claims data has faded. And not a moment too soon as another rise in today’s report would have looked particularly ominous for the labor market. Instead, we have an encouraging update. It’s always hard to know what comes next with this series, but the possibility of continued improvement looks more convincing today.

The drop in the year-over-year change is especially encouraging. Unadjusted claims fell 9.3% last week vs. the year-earlier level. That’s a strong bit of support for arguing that the general rate of progress that’s prevailed for some time remains intact for this series after all. It’s worth reminding that the annual pace of change for unadjusted claims never moved north of zero for a sustained period. We had a few brief flirtations with trouble, but it always evaporated in short order. Until we see claims rising persistently, relative to year-earlier numbers, there’s plenty of room for optimism. By that standard, there are still no smoking guns in the data, even if the last few weeks have hinted at the possibility of darker days.

Today’s update also suggests that the weak pace of growth in March payrolls may also be noise that’s not necessarily indicative of the trend. Of course, one jobless claims report a trend does not make, but the number du jour certainly looks good relative to what we’ve seen. The question is whether we’ll see another decent number next week. If we’re being hoodwinked, we’ll know soon enough. For now, a collective sign of relief is appropriate. That is, until the next economic release, which starts tomorrow, with the March update on retail sales. What should we expect? Here’s a preview.