The report on weekly initial jobless claims was released this morning to much fanfare. The number of new claims fell by 30,000 to 339,000, the lowest since February of 2008. The bottom of the consensus range of predictions in Bloomberg’s survey of economists was 362,000, or a drop of only 5,000 claims. But the reported numbers are misleading. One state (analysts assume it’s California), didn’t report its figures for the quarter.
The Labor Department failed to mention any anomalies in the data in the official press release, but told Dow Jones later through a spokesperson “one large state didn’t report additional quarterly figures as expected, accounting for a substantial part of the decrease.”
Here’s what happened. At the beginning of each quarter, many applicants must reapply for benefits. This usually causes a spike in the raw data and is adjusted for in the seasonally adjusted headline numbers. That adjustment puts downward pressure on the reported number of claims, so when no spike emerged, not only did the numbers not reflect any claims from the unnamed state, but the seasonal adjustment pushed the already distorted number even lower. Look for the number of claims to rebound next week.
