(Bloomberg) -- A clerical error and a data-collection quirk brought significant distortions to the latest U.S. jobless claims report, which has taken on elevated importance as the coronavirus pandemic upends the labor market.
Connecticut said Thursday afternoon that it incorrectly reported unemployment claims as a whopping 298,680, about 10 times higher than the correct number of 29,846. The error likely inflated the U.S. Department of Labor’s reported national figure of 2.98 million, which exceeded economists’ median projection by almost half a million.
The state’s figure had stood out in the report issued Thursday morning as anomalous because it was the highest in the nation, when Connecticut is one of the smallest states and posted 36,138 claims the prior week.
Nancy Steffens, a spokesperson for the state’s labor department, said in an email that it was a “data entry reporting error.” A spokesperson for the U.S. Department of Labor didn’t have an immediate comment when asked how the change affects the national-level figures.
Meanwhile, the U.S. Labor Department’s continuing claims data were influenced by a staggering unadjusted 1.9 million decline in California -- the most populous state -- during the week ended May 2, or about a 40% drop from the prior week. Some 22.8 million continuing claims were reported by the federal government on a seasonally adjusted basis, well below the 25.1 million median estimate in a Bloomberg survey.
Economists are focused on continuing claims to provide insight into how quickly the labor market can stabilize and begin to improve as states begin opening from pandemic-related shutdowns.
In many states, a person who has already filed an initial application needs to file continued claims each week to receive funds while remaining unemployed. In California, residents file every two weeks. Other states use this method as well, but in the Golden State, surging unemployment and the biweekly cycle -- plus a much larger population -- have combined to create outsize swings from week to week.
Pairing the data on continuing claims from alternating weeks in California shows a pattern of rising claims, consistent with the state’s biweekly filing schedule.
The actual number of continuing claims in California may be closer to the number of individuals paid in the week ended May 2 -- 3.1 million -- which is the four-week rolling total shown in a May 7 release from the state government. That’s higher than the 2.9 million figure in Thursday’s Labor Department report.
California’s Employment Development Department and the U.S. Labor Department didn’t have immediate comment to requests for more details.
With volatility in state numbers such as California’s, along with seasonal-adjustment distortions and the expanded number of people who can now file, “all of that is making this harder than usual to interpret,” said Andrew Hollenhorst, chief U.S. economist at Citigroup Inc (NYSE:C). “You just have to be really careful in extrapolating trends from one week to another.”
Even so, it makes sense for Americans to start coming off benefit rolls in some states. For instance, Georgia, which reopened restaurants and hair salons in recent weeks, saw a more than 76,000 person decrease in continued claims from the prior week.
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