Initial Jobless Claims Drop 3.3% as Shutdown Employment Issues Ease

As the effects of the government shutdown and a computer issue with California claims began to taper off, initial jobless claims nationwide fell 3.3% to 350,000 for the week ending Oct. 19, according to a Labor Department report released today.

After claims dropped a revised 2.9% the previous week, this latest report represents a second week of easing initial claims after a 21.1% jump in the week ending Oct. 5 fueled by computer issues in California and the first wave of workers laid off by private contractors affected by the government shutdown. But analysts had expected better, and their 335,000 estimate proved too optimistic.

Federal workers laid off by the shutdown who filed for unemployment benefits are not included in the overall number, but today's report showed that more than 44,000 laid-off federal workers applied for benefits in the week ended Oct. 12, the latest data available. That's down from 70,000 in the previous week. Most federal workers will have to repay the benefits once they receive back pay, but that varies according to state law.

About 350,000 government workers were temporarily laid off during the shutdown, which ended on Oct. 16.  

Source: Author, data from Labor Department. 

From a more long-term perspective, a 3.5% increase in the four-week moving average to 348,250 initial claims is a reminder that employment numbers still have a long way to go before the shutdown and California's effects are entirely in the past. Regardless, 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, four states recorded a decrease of more than 1,000 initial claims for the week ending Oct. 12 (the most recent available data). Ohio was the only state to provide a comment, noting that fewer manufacturing layoffs were the primary pull behind its 2,160-claim dip. 

For the same period, eight states registered increases of more than 1,000 initial claims. California led the nation with an 11,780 increase. Although a recent computer upgrade has caused a backlog of unemployment claims for the state, it noted that layoffs in the service, agriculture, forestry, and fishing industries were the main reasons for the rise.

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

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