U.S. jobless claims drop below 300,000 but computer delays cited

WASHINGTON (MarketWatch) — The number of applications for U.S. jobless benefits fell below 300,000 for the first time since 2006, but the government attributed the surprising plunge to computer-related glitches instead of a sudden improvement in the labor market.

Initial claims sank by 31,000 to a seasonally adjusted 292,000 in the week ended Sept. 7, the Labor Department said Thursday. Yet a government official said two states, one heavily populated and the other small, made changes to their computer systems that resulted in some claims not being processed in time.

The Labor Day holiday may have also skewed the level of claims.

“I don’t necessarily think this is a change in labor market conditions,” the Labor official said. He said it’s department policy not to name the two states involved. Read: Why jobless claims are screwed up.

Before the report came out, economists polled by MarketWatch had expected claims to rise to 330,000 from an unrevised 323,000 in the last week of August.

U.S. stocks rose slightly in early Thursday trades.

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Job seekers wait to interview with company representatives in El Segundo, California.

Some or all of the drop in claims is likely to be reversed in the following week as states catch up in processing applications for unemployment benefits.

“It is unclear what the result would have been without this distortion, and it is likely that the coming week will see a considerable rebound as the “missing” claims are reported by the two states,” said Joshua Shapiro, chief U.S. economist at MFR Inc. in New York.

The average of new claims over the past month, a more reliable gauge than the volatile weekly number, fell by 7,500 to 321,250. That’s the lowest level since October 2007.

Jobless claims have been edging lower since late spring, mainly because layoffs have declined to a post-recession low. The claims report is mainly a proxy for how many people are losing their jobs.

The pace of hiring, on the other hand, tapered off a bit toward the end of summer despite the gradual decline in claims. Companies are still cautious about taking on new workers given the slow pace of growth at home and abroad as well as questions about whether Washington is headed toward another budget showdown in the fall.

Meanwhile, the government said continuing claims in the week ended Aug. 31 decreased by 73,000 to a seasonally adjusted 2.87 million. Continuing claims reflect the number of people already receiving benefits.