The number of new applications for U.S. unemployment benefits fell by 15,000 to 358,000 in the second week of October, but the elevated level of initial claims continued to reflect processing delays in California, the Labor Department said Thursday. Economists surveyed by MarketWatch had expected claims in the week ended Oct. 12 to drop to 335,000 from a slightly revised 373,000. The 368,000 claims figure does not include furloughed government employees, who can seek temporary benefits under a separate program. Jobless claims surged to a six-month high two weeks ago because of California's computer-system problems and private-sector layoffs at companies that rely heavily on government contracts.
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 14 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.