U.S. jobless claims at 6-month high

Weekly jobless claims rise 66,000; California accounts for about half
By Lucia Mutikani
|hrreporter.com|Last Updated: 10/11/2013

WASHINGTON (Reuters) — The number of Americans filing new claims for jobless aid reached a six-month high last week as a computer-related backlog of claims was processed and a partial United States government shutdown began to hit some non-federal workers.

But stripping out these two factors, which economists viewed as temporary, Thursday's report from the Labour Department suggested the labour market continued to improve moderately.

"As the temporary negative factors unwind, the claims data should remain on a downward trajectory, continuing to suggest a gradually improving picture on the layoff side of the labor market equation," said Gennadiy Goldberg, an economist at TD Securities in New York.

Initial claims for state unemployment benefits increased 66,000 to a seasonally adjusted 374,000, the highest level since the end of March, the Labour Department said.

California, which is still dealing with technical problems from the upgrading of its computers, accounted for about half of the increase in claims, a Labour Department analyst said.

Troubles converting to the new system had resulted in a backlog of claims, which were now being pushed through, he said.

In addition, 15,000 of the claims were from non-federal workers affected by the partial U.S.government shutdown, which is now in its second week, the analyst said.

Removing these distortions, claims rose to about 325,000 last week.

"This level of claims is still consistent with very low layoff levels and, therefore, solid nonfarm payroll growth," said John Ryding,chief economist at RDQ Economics in New York.

Economists had expected first-time applications to rise to 310,000 last week. The four-week average for new claims, which irons out week-to-week volatility, increased 20,000 to 325,000.

U.S. financial markets were little moved by the report as traders kept a wary eye on developments surrounding the budget deadlock in Washington.

Government shutdown starting to hurt

The claims data is collected by states and is the only government report being published during the shutdown and so is being closely watched for clues on the health of the job market.

While last week's report showed the shutdown is starting to affect non-federal workers, there has been no sign of furloughed workers filing for unemployment benefits. Claims by federal workers are reported separately and with a one-week lag.

The number of federal employees filing for jobless benefits rose only 359 in the week ending Sept. 28.

White House Council of Economic Advisers’ Jason Furman said the increase in overall claims last week suggested the government shutdown and worries about a debt default were already hurting the economy.

"It's one week's number, the numbers are noisy, but it's yet another signal about how employers are reacting to the fiscal deadlock in Washington," Furman said at a breakfast sponsored by the Center for American Progress.

Separate reports suggested the fiscal stalemate was dampening consumer spending, with a group of nine U.S. retailers expected to report a 3.1 per cent rise in September same-store sales, according to Thomson Reuters. That is below the 5.5 per cent gain for the same period last year.

The budget impasse and signs of tepid consumer spending could see the Federal Reserve not in a hurry to cut back its massive bond-buying program for a while.

Minutes of the U.S.central bank's September policy meeting showed a decision to maintain the monthly US$85 billion in bond purchases that the Fed is making to keep borrowing costs low was a close call.

"The impasse in Washington needs to be resolved soon," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics in ValhallaNew York.

The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid fell 16,000 to 2.91 million in the week ended Sept. 28.

Add Comment

  • *
  • *
  • *
  • *