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Initial Jobless Claims Fall, California Clears Backlog

Posted by Joseph Trevisani on Oct 31, 2013 1:33:00 PM

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The number of American filing for jobless benefits declined last week as the four week process of clearing the backlog in California seems to have ended.

Initial claims dropped 10,000 to 340,000 for the week ended October 26th according to the Labor Department in Washington. The median forecast from the Reuters poll of economists was 339,000.

Problems in California's conversion to a new computer system for tracking and filing unemployment claims has distorted reporting since the beginning of September, first reducing the number of claims as many were unable to file, then inflating the number as the state processed the backlog through October.

A Labor Department spokesman said California reported no delayed applications from previous weeks.

The four week moving average, a more stable measure, rose to 356,250 in the week of October 19th from 348,250 the prior week.  The average had dipped to 305,000 in the last week of September at the height of the California reporting problems, but the subsequent gain of more than 50,000 may be in part due to the 16 day partial shuttering of the Federal government which began on October 1st as furloughed workers applied for benefits.  

Claims have rebounded to the 340,000 -350,000 range in the last two weeks where they had spent most of the year before executing a sharp drop in August and September.

Unemployment claims are considered a leading indicator of job creation by economists. Though the four week moving average fell  from 351,250 in the first week of July to 305,000 in the last week of September there was no corresponding gain in the non-farm payrolls in that period.

In July non-farm payroll fell sharply to 89,000 from June's 172,000. August saw 193,000 new positions and September 148,000.

The Bloomberg economists’ estimate for October is 125,000. The actual figure will be released next Friday November 8th at 8:30 am.

Joseph Trevisani

Chief Market Strategist

WorldWideMarkets Online Trading

Charts: Bloomberg

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