Jobless Claims in U.S. Fall Less Than Forecast on California
More Americans than forecast filed applications for unemployment benefits last week as California continued to work through a backlog, indicating it will take time to gauge the impact of the federal shutdown.
Jobless claims decreased by 15,000 to 358,000 in the week ended Oct. 12 from a revised 373,000 in the prior period, a Labor Department report showed today in Washington. The median forecast of 46 economists surveyed by Bloomberg called for a decrease to 335,000. Applications in California remained elevated and last week’s total also included some non-federal workers dismissed due to the gridlock in Washington, a Labor Department spokesman said as the figures were released.
The legislation passed by Congress last night to raise the debt ceiling and fund the government into 2014 will bring hundreds of thousands of federal workers back to their jobs and may also prompt the recall of non-federal contractors that had been let go. Even so, labor market progress may be slowed by the infighting in Washington as employers wait to see how the economy has been affected.
“It’s still abnormally high because of the shutdown, and it’s still California,” said Yelena Shulyatyeva, U.S. economist at BNP Paribas in New York, who projected claims would fall to 360,000. “The level of claims overall, excluding the special factors, has declined to a healthy, normal kind of level, but that does necessarily mean that payrolls growth will accelerate from now on. We still need to see hiring, and we don’t see that.”
While the claims data continued to be released during the lapse in appropriations, the shutdown has delayed the Labor Department’s September employment report and other government data releases.
Federal workers filed about 70,000 claims for jobless benefits two weeks ago, today’s figures also showed. Those were tallied in a separate category and didn’t influence the headline reading, though contractors’ furloughs will count, a Labor Department spokesman said.
It was difficult to estimate the number of non-federal workers who filed last week, the official also said. Although the gains in states last week most affected by the shutdown were smaller than two weeks ago when about 15,000 applications resulted from furloughs of government contractors, he said. Maryland and Virginia, where many federal contractors are headquartered, were among the states with the biggest jump in claims two weeks ago.
Stock-index futures fell after the Standard & Poor’s 500 Index closed near a record on signs Congress would lift the debt limit, while International Business Machines Corp. and EBay Inc. slid after reporting results. The contract on the S&P 500 maturing in December declined 0.2 percent to 1,709.5 at 8:50 a.m. in New York.
Economists’ estimates in the Bloomberg survey for jobless claims ranged from 301,000 to 380,000 after the prior week’s previously reported 374,000. Applications surged that week as California worked through a backlog caused by a switch in computer systems, a glitch that is still affecting the data, the Labor Department spokesman said.
The four-week average of claims, a less volatile measure than the weekly figures, increased to 336,500 last week from 324,750. No states were estimated last week, a Labor Department spokesman said as the figures were released.
The number of people continuing to receive jobless benefits declined by 43,000 to 2.86 million in the week ended Oct. 5. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Those who have used up their traditional benefits and are now collecting emergency and extended payments decreased by about 46,400 to 1.38 million in the week ended Sept. 28.
The unemployment rate among people eligible for benefits held at 2.2 percent in the week ended Oct. 5.
Forty-eight states and territories reported an increase in claims, while four reported a decline. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings and typically wane before job growth can accelerate.
While the labor market has shown improvement, uncertainty stemming from Washington related to the shutdown and the debt limit may be a source of concern for employers.
URS Corp., a provider of engineering and construction services, furloughed about 3,000 employees due to the U.S. government’s shutdown. The total includes employees idled by the closing of a government facility where they work as well as those directed by U.S. officials to halt operations or cut staffing, San Francisco based URS said in an Oct. 10 statement.
At the same time, consumer confidence has slipped. The Thomson Reuters/University of Michigan preliminary consumer sentiment index for October dropped to 75.2, a nine-month low, while a Gallup index of economic confidence in the second week of October fell to the lowest level since the end of 2011.
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