Unemployment Benefits Claims Up Due to Processing of California Backlog

 The U.S. Department of Labor has reported that the number of applications for unemployment benefits jumped by 66,000 for the week ending October 5 due to a large backlog of claims being processed by California. Additionally, the government shutdown is also blamed for some companies deciding to cut jobs. The four-week average also rose 20,000 to 325,000. Previously, weekly figures were sitting at near six-year lows.

A spokesman for the Labor Department reported that about half of the weekly increase was due to California’s backlog and 25 percent was from an increase in applications from government contractors and similarly affected workers. Federal employees forced into temporary unemployment are also eligible to apply for benefits. There are also no clear signs that hiring is on the rise, even as applications have been down recently.

Last week, ADP reported that businesses added 166,000 jobs during September indicating that hiring remains sluggish. The economy is predicted to have grown at an annual rate of 1.5 to 2 percent for Q3 2013; not fast enough to spur much new hiring. The economy is thought to have been accelerating before the government shutdown and economists predict that it will decrease the expected 2.5 to 3 percent annual rate during Q4 by about 0.15 percentage points.