U.S. jobless claims surge to 6-months high, partly due to shutdown
Claims for U.S. jobless benefits jumped last week to the highest level in six months, providing the first statistical warning that the damage from the partial federal shutdown is starting to ripple through the economy.
While half the increase came from California as the state worked through a backlog following a switch in computer systems, another 15,000 reflected the furlough of non-federal workers from employers losing government business, a Labor Department spokesman said as the data was released to the press. Applications (INJCJC) for unemployment insurance benefits surged by 66,000 in the week ended Oct. 5 to 374,000, the most since late March, figures from the Labor Department showed today in Washington.
“The economic costs of a shutdown are going to increase the longer the shutdown occurs,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania and the second-best claims forecaster over the past two years, according to data compiled by Bloomberg. “If this drags along for the next couple of weeks, the economic toll will be even more significant.”
Shares surged today amid signs lawmakers were moving to reach agreement on increasing the nation’s debt ceiling to avoid a government default. Absent a deal, the possibility that federal agencies will need to slash spending once the borrowing limit is reached probably means hiring plans will be put on hold as business leaders prepare for an economic slump.
The Standard & Poor’s 500 Index climbed 1.6 percent to 1,683.21 at 11:42 a.m. in New York. President Barack Obama said he would accept a short-term increase in the debt limit without policy conditions and that he would negotiate on broader fiscal and health-care policy after the ceiling is raised and the shutdown ends.
Other news today showed the world’s third-biggest economy was strengthening. Machinery orders in Japan jumped in August to the highest level since 2008.
A partial U.S. federal government shutdown lasting through the end of the week could cost the economy 0.2 percentage point in growth, according to the median estimate in a Bloomberg survey of economists issued today. The damage escalates to a 0.5-point loss if the shutdown carries through Oct. 25.