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Those Jobs Numbers Did Look Too Good To Be True

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So, a couple of states—a big one and a small one, to be precise—screwed up a little in reporting unemployment claims to Washington. No big deal, right?

The jobless claims report initially shocked traders at a time of heightened sensitivity to labor-market gauges, which will play a key role in the Federal Reserve's decision next week about whether to adjust its bond-buying program.

"At first, your initial reaction was, of course, 'holy [expletive].' It was a very good number," said Dan Greenhaus, chief global strategist at BTIG LLC.

Some automated trading occurs in markets—without human involvement—the instant economic reports such as jobless claims are released.

In spite of all that, though, no, it wasn't a big deal.

Thursday's report appeared to have a negligible impact on markets after traders saw within seconds—from news headlines after the release—that the figures were faulty, Mr. Greenhaus said.

But it was a close-run thing for a few seconds. Who's to blame?

A Labor Department analyst said two states failed to report all of their claims as they transitioned to new computer systems. As a result, applications either weren't received or didn't get processed.

"A couple of states were doing computer-system conversions, and that resulted in fewer claims being reported," the analyst said. "That played a part—probably the majority of the reason—why the claims [went] in the direction they did this morning…."

"Just when you thought it was safe to pay attention again, the claims data are distorted again," said Stephen Stanley, chief economist at Pierpont Securities.

"This time," he added, "the culprit is bureaucratic ineptitude."

Reporting Anomaly Drives Plunge in Jobless Claims [WSJ]


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