Highlights
Seasonal adjustments expected that California, as it usually does, would report a jump in claims at the beginning of the quarter. Instead, the jump happened the second week. This is a major factor behind violent swings in weekly jobless claims, up 46,000 in the October 13 week after dropping a revised 27,000 in the prior week. Swings like this, which weekly data are subject to, put in focus the four-week average which is only slightly higher, up less than 1,000 to 365,500. This level, in what may be an overlooked plus in this report, is more than 10,000 lower than the month ago trend.

Data on continuing claims are beginning to show noticeable improvement, down a sizable 29,000 for the October 6 week. The four-week average, at 3.276 million, is back near its recovery low back in May. And, for the first time since March, the unemployment rate for insured workers is moving lower, down one tenth to 2.5 percent.

But the improvement in continuing claims is over shadowed by the big spike for initial claims in the latest week. The latest week for initial claims is the sampling week for the monthly employment report and, improvement in the four-week average aside, points to the risk of disappointment for payroll growth and the unemployment rate. Stock futures are moving lower.

Market Consensus before announcement
Initial jobless claims fell to 339,000 in the October 6 week for a 30,000 decline that is the biggest since July. The 339,000 level is the best reading of the recovery. The four-week average was down 11,500 to 364,000 and is now trending more than 10,000 below the month-ago comparison in what points to improvement for both payroll growth and the unemployment rate. A possible issue skewing the number is the adjustment which expected a big swing for the first week of the quarter that did not happen. This week's report will help clear up this issue.