New applications for U.S. unemployment benefits fell by 12,000 to 350,000 in the third week of October, but a major computer-systems snafu in California continued to distort the level of initial claims. Economists surveyed by MarketWatch had expected claims in the week ended Oct. 19 to fall to 337,000 from an upwardly revised 362,000 in the prior week. The four-week average of claims, usually a more reliable number, jumped by 10,750 to 348,250 to mark the highest level since early July, the Labor Department said Thursday.
An upgrade in California's computer system has affected hundreds of thousands of claims, which continues to throw off the national totals.
And what about the government shutdown? Furloughed workers can apply for temporary benefits, but under a separate program that does not impact this 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. This is especially true now, with the nation's largest state having computer problems.
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 the recent spike, we've been below 340,000 in 11 of the last 15 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.