"Claims are likely to be distorted for some time. Private firms are stepping back. Given all the uncertainty, they are unlikely to hire."
- Scott Brown, chief economist at Raymond James & Associates Inc.
The number of American filing initial jobless benefits last week rocketed due to a backlog in California, caused by a switch in computer systems, while partial federal shutdown has become a major drag on the labour market as well. According to the report, jobless claims surged by 66,000, the most since Superstorm Sandy in November 2010, hitting 374,000 in the week ended October 5. This level strongly exceeds the average forecast made by analysts, who expected a figure of 307,000, 1,000 less than a week earlier. At the same time, continuing claims dropped by 16,000 to 2,905,000.
Following a report the government spokesman said a spike in jobless claims was a result of a half the weekly increase occurred in California, where officials delayed reports for several weeks due to a computer upgrade. Meanwhile, many federal workers were temporarily laid off due to the government shutdown, which is lasting for the second week already and its effects are spreading through the country.
Meanwhile, after an unexpected decision not to start tapering stimulus programme, Fed officials said they were disappointed with summer job growth and ambiguous fundamental data. And taking into account recent risks of a government default, stimulus programme can last for longer time than initially was thought.
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