Fewer Americans filed applications for unemployment benefits last week as a backlog in California’s reporting cleared.
Jobless claims decreased by 10,000 to 340,000 in the week ended Oct. 26 from 350,000 the prior period, the Labor Department reported today in Washington. The median forecast of 49 economists surveyed by Bloomberg called for a decrease to 338,000. California said no claims last week represented applications from prior weeks, a Labor Department spokesman said as the figures were released to the press.
Following swings caused by a change in computer systems in California, claims are settling into a higher range, indicating the 16-day partial federal shutdown this month prompted some non-government employers to dismiss staff. Bigger gains in payrolls are needed to boost wages and revive consumer spending, which accounts for about 70% of the economy.
“The issue for the market is job creation,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, who accurately forecast today’s claims number. “We’re not really making up what we lost during the recession.”
Another report today showed business activity in the U.S. jumped this month, according to the MNI Chicago Report business barometer. The index jumped to 65.9 in October, a nine-year high from 55.7 a month earlier. Readings above 50 signal expansion. The median projection in a Bloomberg survey of economists was 55. The 10-point jump was the biggest in thirty years.
Stocks fell after the Federal Reserve statement yesterday fueled speculation it will cut stimulus in coming months and investors assessed corporate earnings. The Standard & Poor’s 500 Index dropped 0.2% to 1,759.91 at 9:56 a.m. in New York.
The four-week average of claims, a less-volatile measure, rose to 356,250 last week, the highest April, from 348,250.
Federal workers filed about 14,400 claims for jobless benefits two weeks ago, down from about 44,100 the prior period. Those were tallied in a separate category and didn’t influence today’s headline reading.
Economists’ estimates in the Bloomberg survey ranged from 320,000 to 370,000. The prior week’s claims were unrevised.
The number of people continuing to receive jobless benefits rose by 31,000 to 2.88 million in the week ended Oct. 19.