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First-Time Jobless Claims Hit Lowest Level Since February 2008

First-time claims for unemployment insurance fell to 339,000 - the lowest level since February 2008 - for the week ended October 6, the ""Labor Department"":http://www.dol.gov/opa/media/press/eta/ui/current.htm reported Thursday. The drop was far steeper than market expectations of 370,000 initial claims. The previous week's report of 367,000 initial claims was revised up to 369,000.


Continuing claims â€" reported on a one-week lag â€" fell 15,000 to 3,273,000. The previous week's report of 3,288,000 continuing claims, revised up from the originally reported 3,281,000. The continuing claims total was the lowest since mid-May.

The claims filings appeared to lend some credence to the report last week when the nation's unemployment rate had fallen to 7.8 percent, the lowest level since January 2009.

The report on claims was influenced in part by a very low seasonal adjustment factor, the second lowest of the year. The Labor Department applies the adjustment factors to account for events which recur regularly each year to remove those factors from week-week comparisons. That said, even the unadjusted number of initial claim filings fell dramatically.

The report will have no impact on the monthly employment situation report for October to be issued by the Bureau of Labor Statistics on November 2, the Friday before election day. Next week's report on initial jobless claims will give the first hint to the unemployment rate for October.

This week's report on initial unemployment claims continues a downward trend for this data series. Indeed, the four-week moving average of first-time claims fell 11,500 to 364,000 â€" the lowest since March. The four-week moving average of continuing claims fell 7,750 to 3,279,250, also the lowest level since March.

The upward adjustment to the prior week's report was the 35th time this year the preliminary data was revised higher.

The total number of people claiming benefits in all programs (state programs, emergency benefits, and extended benefits) for the week ending September 22 was 5,044,649, a decrease of 43,970 from the previous week. There were 6,819,938 people claiming benefits in all programs in the comparable week in 2011. Extended benefits were only available in New York during the week ending September 22. According to the BLS, unemployment was 12,088,000 in September, which means that of those individuals counted as unemployed, 7.04 million were not receiving any form of government unemployment insurance.

States have been borrowing from the federal government to cover shortfalls in those funds, which will eventually have to be repaid unless Congress intervenes with higher assessments on employers.

Since those assessments are a percentage of payrolls, they discourage employers from adding new workers. As of October 9, 20 states have an aggregate $26.6 billion in outstanding loans to cover shortfalls, up from $26.4 billion one week earlier. Absent Congressional action, interest on those loans could lead to states increasing contribution rates required from employers.

States reported 2,106,072 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending September 22, a decrease of 36,977 from the prior week, the Labor Department said. There were 3,016,035 persons claiming EUC in the comparable week in 2011.

According to the Labor Department detail, also reported on a one-week lag, the largest increases in initial claims for the week ending September 29 were in New York (+2,764), California (+2,069), North Carolina (+1,217), Pennsylvania (+989), and Arkansas (+538), while the largest decreases were in Mississippi (-3,393), Michigan (-2,639), Florida (-1,972), Ohio (-1,723), and Oregon (-1,135).

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.

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