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Superstorm triggers big jump in jobless claims

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Bloomberg News
Published:
WASHINGTON -- More Americans than forecast submitted claims for unemployment insurance last week as superstorm Sandy wreaked havoc on the job market.
Applications for jobless benefits surged by 78,000 to 439,000 in the week ended Nov. 10, the most since April 2011, the Labor Department said Thursday in Washington. Several states said the increase was due to the storm that hit the Northeastern part of the country in late October, a Labor Department spokesman said as the data were released to the press.
The extent of the damage means it may take weeks for the underlying trend in firings to again become clear. Before the storm, the labor market was gaining momentum even as year-end domestic fiscal policy uncertainties raised concern among businesses.
"At least a few state labor offices were shut in the prior week so it's almost as if you have two weeks of claims in one," said Ryan Wang, an economist at HSBC Securities USA in New York. "You have a double whammy this week, where people were filing claims they were unable to previously and individuals unable to work for the storm were filing additional claims."
Sandy struck the Northeast, including New York and New Jersey, as it came ashore Oct. 29, and those who lost their jobs because the storm shuttered businesses may keep filing claims in coming weeks.
The Labor Department spokesman did not name the affected states, citing agency policy not to single out any one area. Thursday's report showed a loss of electricity prevented New York offices from taking claims two weeks ago.
In addition, since Monday was a government holiday, three states and territories -- Hawaii, Oregon and Puerto Rico -- didn't report claims data, causing the Labor Department to estimate their totals, the spokesman said. Two others, California and Virginia, provided their own estimates.
Claims were projected to rise to 375,000 from the prior week, according to the median estimate of 49 economists surveyed by Bloomberg. Projections ranged from 340,000 to 475,000. The prior week's reading was revised up to 361,000 from an originally reported 355,000.
"When you're trying to forecast a lot of the economic data, frankly, around a natural disaster like that, it's like throwing at a dartboard," said Ward McCarthy, chief financial economist at Jefferies & Co. Inc. in New York, who projected a rise of 385,000. "We knew they would go up, but it was hard to say how much."
The consumer price index rose 0.1 percent in October, the smallest gain in three months, Labor Department figures also showed today. The so-called core measure, which excludes more volatile food and energy costs, increased 0.2 percent.
Manufacturing in the New York region contracted for a fourth straight month in November as superstorm Sandy knocked out electrical power and limited activity, a report from the Federal Reserve Bank of New York showed.
The bank's general economic index was minus 5.2 this month after minus 6.2 in October. The median forecast of 55 economists in a Bloomberg survey called for minus 8. Readings of less than zero signal contraction in New York, northern New Jersey and southern Connecticut.
While pushing up claims, the storm may bolster homebuilders and other housing repair companies. Sandy's damage could spur a sales boost similar to the one provided by Hurricane Irene, which added about $360 million in sales last year, executives at Home Depot said on a Nov. 13 earnings call.
"The property damage, as we understand it, related to Irene was about $16 billion; the property damage for Sandy is about $20 billion, so it would suggest possibly higher sales, but it's impossible for us to know right now," said Carol Tom, the Atlanta-based company's chief financial officer.
A less-volatile measure of claims, the four-week moving average, rose to 383,750 from 372,000, Thursday's report showed.
The number of people continuing to collect jobless benefits climbed by 171,000 to 3.33 million in the week ended Nov. 3, the most in more than four years. The continuing claims figure does not include the number of workers receiving extended benefits under federal programs.
Those who've used up their traditional benefits and are now collecting emergency and extended payments decreased by about 33,300 to 2.12 million in the week ended Oct. 27.
The unemployment rate among people eligible for benefits rose to 2.6 percent in the week ended Nov. 3 from 2.5 percent. Thirty-four states and territories reported an increase in claims, while 19 reported a decrease.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
The payroll report released Nov. 2 wasn't affected by Sandy. Businesses hired 184,000 workers in October, the most since February, indicating they see enough demand to expand even in the face of the tax increases and spending cuts slated for January unless Congress acts.
Still, changes to headcount show the labor market hasn't been able to gain traction in 2012. Gains in total payrolls so far this year have averaged 157,000 a month, little changed from the 153,000 average for 2011.
A separate survey of households showed the jobless rate rose to 7.9 percent from 7.8 percent in September as 578,000 people joined the workforce is search of a job, swamping the 410,000 gain in employment.
Federal Reserve Chairman Ben Bernanke and his policymaking colleagues last month had a detailed discussion about whether the central bank should link its policy of holding the main interest rate at zero to numerical measurements of unemployment and inflation, an approach that participants "generally favored" over the current approach of specifying a calendar date through which rates will remain low, minutes of their October meeting released Wednesday showed.

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