Jobless claims are up 15,000 to a seasonally adjusted 309,000, beating consensus expectations, but that number is probably just an artifact of two states changing the way they process claims, according to a Reuters report.
Drop in new jobless claims
California and Nevada have both updated the computer systems used to process unemployment benefits, and there are still a lot of unprocessed claims because of the transition. Full numbers aren’t expected for at least another week. This caused what appeared to be a drop in new jobless claims in both states, which had enough of an impact on national numbers to bring the total in under consensus. Four-week averages, which reduce the impact of these types of events, are also lower than expected but will probably fall in line once the two states catch up on paperwork.
Jobs numbers are especially important right now, as investors try to predict when Fed Chair Ben Bernanke will initiate tapering. He has indicated that unemployment numbers are one of the main factors affecting his decision, and Vice Chair Janet Yellen, now the front runner to succeed Bernanke, is expected to keep the same basic framework in place. Unemployment of 6.5 percent, as long as inflation remains below 2.5 percent, has been a rough guide.
Ben Bernanke on job market
If the drop in jobless claims had been real, it would have given Bernanke a powerful argument in favor of tapering, but yesterday Bernanke said that “conditions in the job market today are still far from what all of us would like to see,” Bloomberg reports, surprising many with his decision not to start tapering. He said that tapering may still begin before the end of the year.
In another sign that the economy is improving, the Commerce Department announced that the country’s current account deficit was at its lowest level in four years last quarter. The deficit fell from $104.9 billion to $98.9 billion for 2Q2013 on the strength of export growth. This was the smallest deficit relative to GDP since 1998, falling to 2.4 percent from a record 6.2 percent of GDP in 2005. Reuters reports that a survey of economists predicts that the deficit will continue to fall, hitting $97 billion in the last quarter of this year.
