Jump in First-Time Jobless Claims Sharpest Since 2009

First time claims for unemployment insurance shot up 46,000 to 388,000â€"the highest level since Julyâ€"for the week ending October 13, the ""Labor Department"":http://www.ows.doleta.gov/press/2012/101812.asp reported Thursday. Economists expected initial claims to bounce back up to 365,000 after seasonal factors drove the number of claims down to the lowest level in 54 months.

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The weekly increase was the steepest since the end of January 2009, when claims soared 53,000 in one week.

Since claims reports are usually revised upward (the prior week's report was increased to 342,000 from the originally reported 339,000, the 37th upward revision this year) the ""final"" claims total will likely end up as the highest since January.

Continuing claimsâ€"reported on a one-week lagâ€"fell 29,000 to 3,252,000. The previous week's report of 3,281,000 claims was revised up to 3,288,000. The continuing claims total was the lowest since mid-May.

The claims report covered the same week used for the upcoming Employment Situation report to be released on November 2, the last reading of the unemployment rate ahead of the November 6 election. It could bring the unemployment rate back up from the 7.8 percent reading for September, the lowest since President Obama took office.

The change in initial filings from mid-September to mid-October though was modest, an increase of 3,000, which could mitigate the week-to-week fluctuations.

Just as the previous week's report was influenced in part by a very low seasonal adjustment factorâ€"the second lowest of the yearâ€"this week's report reflected the impact of a stronger adjustment factor.

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The Labor Department applies the adjustment factors to account for events which recur regularly each year to remove those factors from week-to-week comparisons. That said, the unadjusted number of initial claim filings rose sharply.

On a longer range trend basis, the four week moving average of initial claims rose 750 to 365,500, and the four week moving average of continuing claims fell 5,750 to 3,275,500, its lowest level since May.

The total number of people claiming benefits in all programs for the week ending September 29 was 5,001,985, a decrease of 42,664 from the previous week. There were 6,694,493 persons claiming benefits in all programs in the comparable week in 2011. Extended benefits were only available in New York during the week ending September 29. According to the BLS, unemployment was 12,088,000 in September, which means that of those individuals counted as unemployed, 7.09 million were not receiving any form of government unemployment insurance, up from 7.04 million one week earlier.

States have been borrowing from the federal government to cover shortfalls in those funds which will eventually have to be repaidâ€"unless Congress intervenesâ€"with higher assessments on employers. Since those assessments are a percentage of payrolls, they discourage employers from adding new workers. As of October 16, 20 states have an aggregate $26.8 billion in outstanding loans to cover shortfalls, up from $26.6 billion one week earlier. Absent Congressional action, interest on those loans could lead to states increasing contribution rates required from employers.

States reported 2,098,793 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending September 29, a decrease of 7,279 from the prior week, the Labor Department said. There were 2,967,054 persons claiming EUC in the comparable week in 2011. EUC weekly claims include first, second, third, and fourth tier activity.

According to the Labor Department detail, also reported on a one-week lag, the largest increases in initial claims for the week ending October 6 were in New York (+2,700), Oregon (+2,215), Illinois (+1,800), Texas (+1,724), and Georgia (+1,651), while the largest decreases were in California (-4,979), Alabama (-322), West Virginia (-50), and Rhode Island (-42).