The number of Americans applying for new unemployment benefits jumped last week as Hurricane Harvey pounded Houston and disrupted economic activity along the Gulf Coast.
Initial jobless claims, a proxy for layoffs across the U.S., rose by 62,000 to a seasonally adjusted 298,000 in the week ended Sept. 2, the Labor Department reported Thursday. Economists surveyed by The Wall Street Journal had expected a more modest rise to 241,000 new claims.
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The agency said Hurricane Harvey helped produce the largest one-week jump for initial claims since November 2012, during the aftermath of superstorm Sandy. Jobless-benefit applications surged last week in Texas and rose slightly in Louisiana, which bore the brunt of the storm.
"It looks clear that Harvey impacted the claims data and disrupted the labor market," J.P. Morgan Chase economist Daniel Silver said in a note to clients. "But it still remains unclear exactly how large the disruptions will be and how long they will last."
Claims have remained at historically low levels for several years, a sign of underlying health in the job market. Even with the latest upswing, jobless claims have remained below 300,000 for 131 straight weeks, the longest such streak since 1970 -- when the U.S. population and workforce were far smaller than they are today.
But the flooding and destruction in Texas and Louisiana as a result of Harvey could cause significant job losses, at least temporarily. It will likely take several weeks for the storm's full impact to show up in claims data -- in addition to any potential effects from Hurricane Irma, which this week was headed toward the Florida coast.
"Right now, the forecast track for Irma suggests it will push up claims by at least as much as Harvey, and potentially more, especially if it makes a second landfall in Georgia or South Carolina," said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a note to clients.
Between the two storms, he said, jobless claims could rise by more than 300,000 and "there's a decent chance of an outright decline in payrolls in September." U.S. nonfarm employers have added jobs every month since October 2010, according to Labor Department data.
An important caveat: Data on jobless claims tend to be volatile from week to week, and especially around holidays; Monday was Labor Day.
Beyond short-term noise, the economic impact of the hurricane should come into focus over the coming weeks and months. Some forecasters have predicted the destruction caused by Hurricane Harvey will weigh on economic activity in the third quarter, but could boost growth in the fourth quarter as rebuilding efforts take shape.
More broadly, the U.S. labor market remained on solid footing in late summer. The unemployment rate in August was 4.4%, the Labor Department reported last week, ticking up from July but remaining below 4.5% for the fifth straight month. Nonfarm payrolls have climbed by an average of 176,000 a month so far this year.
Also Thursday, the Labor Department said the number of claims drawn by workers longer than a week fell 5,000 to 1.94 million in the week ended Aug. 26. Data on continuing claims are released with a one-week lag.
Write to Ben Leubsdorf at firstname.lastname@example.org
(END) Dow Jones Newswires
September 07, 2017 10:16 ET (14:16 GMT)