Jobless Claims Jump 21% on Government Shutdown and Calif. Computer Issues

Initial jobless claims jumped 21.4% to 374,000 for the week ending Oct. 5, according to a Labor Department report released today that was affected by a backlog of claims that got processed as well as the first influx of private-sector workers hit by the shutdown.

After remaining near recovery lows the previous week at 308,000, this newest report blew away analysts' expectations of 310,000 initial claims.

Although the spike came as a surprise, data remain muddled due to continued California claims computer problems, as well as effects of the government shutdown. California accounted for about half the increase, as the state continued to work though its backlog of claims built up from a claims system switchover last month. Although furloughed federal workers won't be counted in overall jobless claim numbers, around 15,000 of this report's increase came from employees at government contractors and other workers affected by the shutdown.

Source: Author, data from Labor Department. 

From a more long-term perspective, the latest surge helped create a 6.6% increase in the four-week moving average to 325,000 initial claims. Both the latest week's claims and the four-week average fall significantly below 400,000, a cutoff point that economists consider a sign of an improving labor market.

On a state-by-state basis, five states recorded a decrease of more than 1,000 initial claims for the week ending Sept. 28 (most recent available data). Michigan dropped the most (2,060), but its decrease was due to a shortened workweek as the state prepares for its own computer system conversion. 

For the same period, Puerto Rico, Oregon, and California all registered bumps between 1,000 and 1,100 additional initial claims.

-- Material from The Associated Press was used in this report.

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