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WASHINGTON/NEW YORK (Reuters) - U.S. jobless claims fell last week and mid-Atlantic factory activity kept growing in October, but a just-ended government shutdown as well as computer issues affecting the claims report impeded the data's value as signposts for the economy.
Initial claims for state unemployment benefits fell 15,000 to a seasonally adjusted 358,000, the Labor Department said on Thursday, slipping from a six-month high the prior week. But the figure was still elevated as California continued to deal with a backlog related to computer problems.
Economists polled by Reuters had expected first-time applications to fall to 335,000 last week.
"Jobless claims are still dealing with a lot of computer glitches and other temporary factors. It's hard to extract anything meaningful from them," said Lindsey Piegza, chief economist with Sterne Agee & Leach in Chicago.
California's technical problems have been dragging on for a few weeks, but should be transitory. The effects of the recent squabbling in Washington were unclear.
The federal government shut down for the first half of October as Republicans refused to fund government operations without major concessions by the Democrats on President Barack Obama's signature healthcare act, passed three years ago.
That shutdown - along with the threat of default as the nation threatened to hit its borrowing limit - faded with an 11th-hour spending deal by Congress on Wednesday. The deal will fund the government through mid-January and raise the country's borrowing authority until February 7.
A Labor Department analyst said there had not been a perceptible increase in filings last week from non-federal workers furloughed because of the government shutdown.
During the week ended October 5, the first week of the shutdown, there were 70,068 claims from furloughed federal workers. Claims for federal workers are reported separately and with a one-week lag.
Though claims rose last week, the underlying trend remains consistent with a gradually healing labor market.
The four-week moving average for new claims, which irons out week-to-week volatility, rose 11,750 to 336,500.
A separate report showed business activity in the mid-Atlantic region expanded this month, but more slowly than in September.
The Philadelphia Federal Reserve Bank said its business activity index slipped to 19.8 in October from 22.3 in September. The October figure was still well above economists' expectations for a reading of 15.0.
The survey has now been positive for five straight months. Any reading above zero indicates expansion in the region's manufacturing. The survey covers factories in eastern Pennsylvania, southern New Jersey and Delaware.
"This is kind of surprising given what's been happening in Washington," said Scott Brown, chief economist with Raymond James in St. Petersburg, Florida. "I want to see another month of this. The key economic story was that it was going to be stronger were it not for the government."
Nevertheless, survey respondents said their outlook remained bright. The six-month business conditions index rose to 60.8, the highest level since September 2003, from 58.2 last month.
Reporting by Luciana Lopez in New York and Lucia Mutikani in Washington; Additional reporting by Richard Leong in New York; Editing by Andrea Ricci