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U.S. Department of Labor/Michelle Kim, MEDILL NEWS

The number of Americans seeking first-time unemployment benefits declined for a third straight week as the claims backlog in California eased.

Weekly U.S. jobless claims drop as California backlog clears up

by Michelle Kim
Oct 31, 2013

The number of Americans seeking first-time unemployment benefits declined for a third straight week as the claims backlog in California eased.

For the week ended Oct. 26, the seasonally adjusted initial claims fell by 10,000 to 340,000, from 350,000 in the previous week. Economists surveyed by Bloomberg forecasted first-time applications would fall to 338,000. 

A Labor Department spokesman said only new claims were accounted for in California for the first time since early September and added the government shutdown had no impact on the latest national figures.

The state of California experienced technical problems while converting to a new computer system, which caused a backlog for several weeks in early September. The number of initial job claims remained under 310,000 during that period but then jumped significantly as the state worked through the backlog.

“This is the first week California is less important and we’re back to reality,” Andrew Zatlin, the chief economist and founder of Southbay Research LLC, said. “That doesn’t necessarily mean we’re going down or up. It means we’re flat-lining a little bit.”

The four-week moving average of claims, which smooths out short-term distortions, was 356,250, up 8,000 from the previous week. Continuing claims, which counts people who remain on unemployment insurance, increased 31,000 to 2,881,000, for the week ended Oct. 19.

While there seems to be a downward trend in the number of Americans filing for unemployment insurance benefits, economists said that doesn’t seem to be translating into new job creation. In September, employers added only 148,000 jobs, down from 193,000 in August, according to the Bureau of Labor Statistics’ monthly employment report.

“Keep in mind, claims say more about unemployment than employment,” Ray Stone of Stone & McCarthy Research said. “What the claims do show is that layoffs are down, but they tell us nothing about new hiring.”

Stone is forecasting a further drop in initial jobless claims to 333,000 for the week ended Nov. 2, but he expects nonfarm payroll employment to have risen by only 70,000 in October. The partial government shutdown has delayed the Department of Labor’s monthly employment report by one week to Nov.8. 

While the economy has been modestly growing this year, Zaitlin expects jobless claims to rise in the coming months.

“Looking ahead, we’re at a tipping point,” Zatilin said. “I think jobless claims are going to remain here until January and I think they’re going to go up because we’re not seeing enough economic growth.”