Initial Jobless Claims Shrink 15,000, But Still Distorted by Shutdown and California

The number of Americans making first time filings for jobless benefits pulled back from six month highs last week, but the figures remain skewed because of the partial government shutdown and California still trying to process a backlog of claims resulting from a computer system upgrade a month ago. 

The Labor Department reported on Thursday that initial jobless claims for the week ended October 12 declined by 15,000 to a seasonally adjusted 358,000 from a revised 373,000 claims (down from 374,000) the week earlier.  Economists were expecting a drop to 335,000 claims.

The week prior claims mushroomed to the highest level since March because of the start of a 2-1/2 week partial shutdown of the government due to politicians not agreeing on a budget.  Further, California, which was previously reported to have been caught up on processing a stockpile of claims resulting from a computer changeover in September, was not done and is still working its way through the backlog.

On that point, it’s difficult to get a good gauge on meaningful data from this week’s claims.  The shutdown also clouded the condition of the jobs market by delaying the monthly employment situation report that was supposed to arrive on October 4.

The shutdown ended this morning after Congress passed a last minute deal on Wednesday to fund the government through mid-January and raise the debt ceiling until early in February.

The four-week moving average of initial jobless claims, generally a better barometer of the labor market (but not so at this point because of temporary issues), rose by 11,750 to 336,500.  That’s the highest mark since July.

Continuing claims for the week ended October 5, which account for people already collecting benefits in state programs, fell to 2.859 million from a revised 2.902 million a week prior.  Continuing claims are reported at a one-week lag to initial claims.

Total claims for the week ended September 28, which includes recipients of all state and federal claims benefits, dropped to 3.929 million from 4.011 million the week earlier.  Total claims come at a two-week lag to initial claims.  For the same period in 2012, total claims were 5.002 million.

The largest increases in initial claims for the week ending October 5 were in California (+33,654), Maryland (+4,609) and Ohio (+4,122).  The largest decreases were in Oregon (-149), Puerto Rico (-77) and Missouri (-50).

The markets are largely ignoring the data on Thursday because of the lack of clarity to the figures.  Wall Street is mixed with the Dow Jones Industrial Average feeling a drag from Goldman Sachs (GS) and International Business Machines (IBM) , tugging the index down 61 points, while the broader S&P 500 is ahead by 4 points and the tech-rich Nasdaq advances 10 points at the noon hour.

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