During the government shutdown, publication of nearly all economic reports comes to a halt. The exception is initial unemployment claims from the Department of Labor, which relies on data collected by state officials, not federal officials.
The number of people who filed new requests for U.S. unemployment benefits surged to 374,000 in the first week of October -- the highest level in six months -- because of ongoing application-processing snafus in California and government shutdown-related layoffs, the Labor Department said Thursday. The 66,000 increase in seasonally adjusted claims for the week ended Oct. 5 marked the biggest spike since last November. Economists surveyed by MarketWatch had expected claims to rise to 312,000 from an unrevised 308,000 in the prior week.
The leap in claims largely reflects recurrent computer problems in California, a Labor spokesman said, but some states also reported higher layoffs in private-sector industries such as defense that rely heavily on federal contracts. California's switchover to a new computer system in early September has resulted in prolonged delays in working through claims applications. The latest claims report, however, does not include furloughed government employees. They file applications through a separate program and do not show up in the Labor Department's main claims report.
To reiterate the point I make every Thursday morning, it's worth remembering that week-to-week results can vary widely, and it's best not to read too much significance into any one report.
In terms of metrics, when jobless claims fall below the 400,000 threshold, it's considered evidence of an improving jobs landscape, and when the number drops below 370,000, it suggests jobs are being created rather quickly. At this point, despite this morning's spike, we've been below 340,000 in 11 of the last 13 weeks.
Above you'll find the chart showing weekly, initial unemployment claims going back to the beginning of 2007. (Remember, unlike the monthly jobs chart, a lower number is good news.) For context, I've added an arrow to show the point at which President Obama's Recovery Act began spending money.
