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October 11, 2012

October 6 week jobless claims drop; at lowest level in four years

by Rylan Stewart

The labor market received its second piece of surprising good news in the past week. After September’s unemployment rate unexpectedly fell to 7.8 percent, the October 6 week unemployment claims dropped to their lowest level in four years at 339,000, a steep decline of 30,000 claims.

[Related: The real employment picture: digging deeper into September’s 7.8 percent unemployment figure]

Last Friday we wrote that the September jobs report, while positive, did not provide evidence of a turnaround for the U.S. employment picture. This most recent jobless report has come under the same scrutiny, although for different reasons. According to CNBC, the improved figure has to do more with the seasonal adjustment metric than with an underlying improvement in the jobs market. From the article entitled Why Jobless Claims May Not Be as Good as Market Thinks by Kelly Evans:

It is unclear why that happened or how unusual that is. What is clear is that the expected spike in claims around the start of each quarter was smaller this time than usual. Coupled with the seasonal adjustment (that expected a bigger increase), that pushed down the headline figure.

Initially, stocks jumped after the announcement, but settled back near opening levels as the day progressed.

 

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