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First Cut: Government shutdown gets the blame for rise in jobless claims in January 26 week

Initial jobless claims jumped 53,000 to 253,000 in the week ended January 26 from the revised 200,000 in the prior week (previously 199,000).  The Labor Department said it was the highest since 254,000 in the September 30, 2017 week.

The sharp rise was probably due to the lengthening of the partial government shutdown. Unpaid government contractors faced the necessity of temporary layoffs and California said it would accept claims for unemployment insurance from federal employees. California registered an unadjusted level of claims that was up 11,159 in the week. Given the reopening of the government on January 28, the upswing is likely to be short-lived and no more than a week or two’s impact for continuing claims. If there is a second shutdown after the February 15 deadline to fund the government, the situation could deteriorate again.

For similar reasons, continuing claims rose 69,000 to 1.782 million in the January 19 week. The impact from the shutdown may be evident in next week’s data as well but should decline thereafter.

Conditions in the broader labor market remained tight with the insured rate of unemployment unchanged at 1.2% for a ninth week in a row.

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