Superstorm Sandy drove a surge in new claims for U.S. jobless benefits last week and weighed on factory activity in November, providing early signs of how heavily the storm could hit the U.S. economy in the fourth quarter.
Initial claims for state unemployment benefits rose 78,000 to a seasonally adjusted 439,000, the highest level since April 2011, the Labor Department said on Thursday.
It was the biggest one-week jump since the spike caused by Hurricane Katrina in September 2005.
Severe storms and other natural disasters usually have only temporary impacts on the economies of rich nations like the United States. Many analysts think Sandy's effects on jobless claims could fade within a few weeks. Thursday's data nonetheless reinforced the view that U.S. economic growth took a hit from the storm, if only in the short term.
"We will likely see a step back in job growth," said Ryan Sweet, senior economist at Moody's Analytics in West Chester, Pennsylvania.
The U.S. jobs market has had a painfully slow recovery from the 2007-09 recession, although the unemployment rate was at 7.9 percent in October, down four tenths of a point from July.
Economists polled by Reuters before Thursday's data expected the pace of job growth would slow to an average 144,000 jobs per month in the fourth quarter, down from 174,000 in the third quarter.
An analyst from the Labor Department said several states from the mid-Atlantic and Northeast reported large increases in claims due to Sandy, a mammoth storm that slammed into the East Coast in late October.
The storm left millions of homes and businesses without electricity, shut down public transportation and caused widespread damage in coastal communities.
Economists expect the storm could shave as much as half a percentage point from economic growth in the last three months of the year, but that should be made up early in 2013.
Retail sales data on Wednesday pointed to a softening in U.S. consumer spending early in the fourth quarter as Sandy slammed the brakes on automobile purchases last month.
Wal-Mart Stores Inc, the world's biggest retailer, reported quarterly sales below analysts' expectations on Thursday, but said it was well-positioned for holiday sales in the United States as the year end approaches.
"Current macroeconomic conditions continue to pressure our customers," Chief Financial Officer Charles Holley said. "The holiday season is predicted to be very competitive, but we are very well prepared to deliver on the value and low prices our customers expect."
U.S. stocks and U.S. Treasury debt prices were lower in morning trading.
Separately, the Philadelphia Federal Reserve Bank said its business activity index slumped to -10.7 from 5.7 the month before. The fall was much steeper than economists' expectations for a reading of 2.0, according to a Reuters poll.
Any reading above zero indicates expansion in the region's manufacturing. The survey covers factories in eastern Pennsylvania, southern New Jersey and Delaware.
A gauge of manufacturing in New York state showed that activity slowed in November for a fourth straight month, the New York Federal Reserve said.
Despite the decline, new orders rose, the first positive reading for the forward-looking component index since June.
These two monthly Fed surveys are early indicators of the health of U.S. manufacturing leading up to the national report for November by the Institute for Supply Management.
"The impact of the recent storm associated with Hurricane Sandy was significant," said Michael Trebing, a senior economic analyst at the Philadelphia Fed.
He added that "the impact would be short-lived."
The Labor Department said in another report the consumer price index edged up just 0.1 percent last month, with an increase in shelter costs offsetting a drop in gasoline prices.
A reading of so-called core prices, which strips out volatile food and energy costs, rose a trend-like 0.2 percent.
The data showed the rate of inflation largely holding steady, which was seen giving the Federal Reserve room to continue efforts to bolster the recovery with asset purchases and near-zero interest rates.
"I wouldn't say that core CPI is worrying at all," said David Sloan, an economist at 4Cast in New York.
The price of shelter, which includes rent, rose 0.3 percent during the month, the most since 2008, and accounted for more than half of the increase in the CPI. Rents for primary residences rose 0.4 percent, which could suggest a strengthening in the economy is giving landlords more leverage to raise rents.
Gasoline prices fell 0.6 percent in October after climbing 7 percent the prior month. That was the first drop in gasoline prices since June. Higher costs at the pump have forced many American consumers to cut back on other spending.
In the 12 months to October overall consumer prices increased 2.2 percent, up a tenth of a point from September's reading. Core prices rose 2 percent in the year through October, matching the 12-month reading from the prior month.