Jobless claims fall as shutdown impact wanes

Fewer Americans filed initial applications for unemployment benefits last week, indicating that the labor market is improving and the government shutdown may no longer be affecting claims totals.

The number of initial claims for the week ending Nov. 2 dropped by 9,000 by 336,000. The previous week's total was revised up by 5,000 to 345,000. Economists' consensus estimate was that 335,000 claims were filed last week.

The four-week moving average fell 9,250 to 348,250.

Jobless claims are typically a reliable barometer of the labor market's health because they reflect layoffs, but the figures have been volatile the past two months. In September, a computer problem in California's labor office depressed average claims totals to a post-recession low of 308,000. Then, the California backlog was cleared in October, raising claims as high as 362,000.

The Labor Department said figures for the week ending October 26 did not include any delayed California claims. But the totals may still have reflected the Oct. 1-16 federal government shutdown, which prompted some federal employees, contract workers and other impacted private-sector workers to apply for benefits, says Jim O'Sullivan, chief U.S. economist of High Frequency Economics.

O'Sullivan says the shutdown likely had no direct effect on last week's claims totals. As a result, he says, the report is the first in two months that isn't tainted by extraordinary factors. In August, before the California backlog, jobless claims were falling and averaging 329,000 a week.

The claims totals, he says, are a better measure of employment than the October jobs report that the Labor Department will release Friday. That report, which surveyed the payrolls of employers in the week that includes Oct. 12, will likely reflect that thousands of private-sector workers were temporarily laid off during the shutdown.The 450,000 furloughed federal workers are being counted as employed because they received back pay.

As a result of the shutdown! , the median estimate of economists surveyed by Action Economics is that employers added just 122,000 jobs last month, down from 148,000 in September. O'Sullivan expects an even larger impact, with just 85,000 jobs added in October.