WASHINGTON – The number of people seeking U.S. unemployment benefits dropped 12,000 to a seasonally adjusted 350,000 last week, though the total was elevated for the third straight week by technical problems in California.
The Labor Department said Thursday that the less volatile four-week average jumped by nearly 11,000 to 348,250.
Weekly applications have been inflated for the past three weeks, largely because California has been processing a huge number of applications that were delayed because of a computer upgrade. The 16-day partial government shutdown has also lifted claims this month because a number of government contractors were laid off temporarily.
A government spokesman said the backlog in California affected last week’s figures but noted shutdown’s impact appears to be fading.
Applications have declined for the past two weeks, suggesting California is working through its backlog. And in August, before all the distortions, applications had fallen to pre-recession levels. That indicated companies were cutting very few workers.
Falling applications for unemployment benefits are typically followed by more hiring. But in recent months hiring has slowed, rather than accelerated.
Employers added only 148,000 jobs in September, the government said Tuesday, down from 193,000 in August. The September jobs report was delayed 2 1/2 weeks because of the shutdown.
Hiring has slowed since the beginning of the year: Job gains averaged 207,000 from January through March, but fell to 182,000 from April through June and dropped further to 143,000 from July through September.
And hiring likely weakened further in October. Government contractors temporarily laid off workers. Other companies, such as restaurants and hotels located near national parks that were closed, also likely cut jobs.
About 350,000 government workers were temporarily laid off during the shutdown, which ended on Oct. 16. Thursday’s report showed that more than 44,000 laid-off federal workers applied for benefits in the week ended Oct. 12, the latest data available. That’s down from 70,000 in the previous week. Applications by federal workers, however, are not included in the unemployment claims data.
Most federal workers will have to repay the benefits once they receive back pay, but that varies according to state law.
Nearly 3.9 million people were receiving unemployment aid in the week ended Oct. 5, the latest data available. That’s about 70,000 fewer than the previous week.
Many economists estimate the shutdown cut about $25 billion from the economy. Several have lowered their forecasts for growth in the October-December quarter by a half-point to an annual rate of 2 per cent or less.