The number of Americans filing for first-time jobless benefits last week plunged to the lowest level since April 2006, according to the weekly report from the Labor Department. Sounds fantastic for the US economy, right? Well, not necessarily, as it seems the sharp decline was mostly attributable to work on computer systems in two unidentified states that caused fewer claims to be reported.
Anyway, the agency said that for the week ended September 7, the advanced figure of initial jobless claims, a barometer of weekly layoffs, dropped to a seasonally adjusted 292,000, a decrease of 31,000 from an unrevised 323,000 the week prior. The report confounded economist expectations of a slight rise in claims to 330,000 for the week.
The four-week moving average, a figure that irons out weekly volatility and is regarded as a better gauge of the labor markets, sunk 7,500 to 321,250 from a revised 328,750 (revised up from 328,500). The week’s prior figure was the lowest since October 2007 (as was the newest number).
Continuing claims, or those people already collecting state benefits, decreased by 73,000 to 2.871 million in the week ended August 31. Continuing claims are reported at a one-week lag to initial claims.
The total number of people collecting benefits across all state and federal programs dropped by 122,971 to 4.273 million in the week ended August 24. Total claims are reported at a two-week lag. At the same time in 2012, 5.391 million people were collecting benefits.
The largest increases in initial claims for the week ending August 31 were in Oregon (+1,085), Pennsylvania (+725) and Nebraska (+609). The largest decreases were in California (-4,988), Nevada (-2,125) and New York (-1,259).
The Labor Department declined to identify which states were having their computers upgraded, leading to a complete set of claims failing to be processed. The agency only identified the states as one being large and the other one small. Further, claims might have been clouded last week because of nationwide closings for the Labor Day holiday last Monday.
Expect the full set of data being collected and processed to result in a healthy revision next week. On the bright side, it still looks like the number of applications could have declined compared to the week prior, against analyst predictions and still giving signs that the nation’s jobs market remains on the mend. Even as employers are maintaining staff, the problem still is that they’re not hiring additional help. Last week, the Labor Department reported that the U.S. added 169,000 jobs in August, shy of expectations. Worse, though, were the revisions for June and July that showed 74,000 fewer jobs were created during those months than originally estimated.
Given the shaky reliability of the data, the markets weren’t able to read into it too much to try and get a feel for what the Federal Open Markets Committee may do at their meeting scheduled for September 17 – 18 regarding QE3. Most analysts still expect the Fed to unveil a reduction in its stimulus policy of buying $85 billion each month in Treasuries and mortgage-backed securities.
After two days of robust gains, Wall Street is kicking back some in Thursday action with the Dow Jones Industrial Average off by 24 points, the S&P 500 down 5 points and the Nasdaq lower by 4 points about halfway through the day.
[Image: A 1931 Depression-era soup kitchen in Chicago, Courtesy of Wikimedia Commons]