Major Surprise in Weekly Jobless Claims: Best in Years — with a Major Catch

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The U.S. Labor Department released its report on weekly jobless claims, and this looks to be the best report in years. Unfortunately, the officials said that the drop appears to be largely due to faulty reporting by states in the report. Weekly Jobless claims fell by some 31,000 to a post-recession low of 292,000. Dow Jones was calling for 330,000. This headline was the lowest reading in more than seven years.

Where this gets interesting is that you know a number of this magnitude triggered massive trading from the algorithms and program trading shops. So, how does that work when the headline appears to be an error? The report showed that two states did not input their data entirely as they transitioned over to new computerized reporting systems. The shortened Labor Day week was cited also as a possibility for such a low number.

We saw that the prior week was left unchanged at 323,000. The report on continuing jobless claims, what we call the army of the unemployed, fell by some 73,000 to 2,871,000, and we would point out that this figure always comes with a one-week lag.

Thursday’s jobless claims report would be a massive report if not for the “error” in the data being indicated. Now it is hard to know what the real trend is, but likely it is for slow and steady improvements. S&P futures are down one point and DJIA futures are down five points.