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Unemployment claims at highest level since 1996 amid shutdown

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As the U.S. government shutdown nears its fifth week, the number of Americans filing for unemployment benefits was largely unchanged, continuing an upward trend that began before the shutdown began.

Initial claims for state unemployment insurance declined by 4,000 to 224,000 in the week ended Oct. 6, according to the U.S. Department of Labor.

It’s the 16th straight week where initial claims have remained near, or above, the 225,000 mark. The last time this happened was in February 1999.

The last time more than one week’s worth of weekly data were recorded below 225,000, which was for two months in November 1996, was November 1994.

The four-week moving average of initial claims increased by 6,500 to 221,750 last week.

The number of Americans claiming state unemployment benefits was at 66,000 for the week ended Sept. 29, an increase of roughly 5,000 from the week prior. This level, which is considered an indication of short-term employment levels, is near the 37-year low reached in the first week of August.

The manufacturing sector, which has been a bright spot in the labor market in recent months, appears to be accelerating. A series of reports earlier this month showed that factory activity grew in the third quarter to the highest level since 2014. The Institute for Supply Management’s manufacturing index was 59.9, up from 58.7 in August.

But the economy remains somewhat vulnerable.

The shutdown itself appears to be holding the economy back by reducing business activity and stalling public investment, even before it’s fully implemented.

A survey released earlier this week showed that hiring by employers in July and August declined. The government said a further drop is expected in September.

And many federal agencies and agencies, including the Federal Bureau of Investigation, are now furloughed, which hinders the ability of local and state law enforcement agencies to process requests for service, and the deployment of military personnel overseas.

The shutdown also disrupted the court system in the District of Columbia, which could impact minor criminal cases as well as ongoing cases that could land some defendants in jail.

The shutdown isn’t likely to linger long. But a Democratic lawmaker’s warning that the shutdown could last into next year seems more credible than some of her colleagues.

Sen. Debbie Stabenow, D-Mich., raised the specter of a long shutdown in a New York Times opinion piece in early October.

“On the eve of the State of the Union Address, next week, after the first full week of homecomings, Christmas shopping starts, the holidays and the new year are approaching,” she wrote. “This should be a very busy week for the federal government.”

She continued: “As my colleagues acknowledge, the across-the-board government shutdown could stretch to late January or into February. This gives President Trump, no matter what he wants to say in speeches and public statements, only weeks before the end of the year to make a deal. And this will be particularly important for so many of my colleagues who are in tough races.”

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