Hurricane Harvey lifts US jobless claims to more than two-year high

The number of Americans filing for unemployment benefits jumped to its highest level in more than two years last week amid a surge in applications in hurricane-ravaged Texas, but the underlying trend remained consistent with a firming jobs market.

Initial claims for state unemployment benefits soared by 62,000 to a seasonally adjusted 298,000 for the week ended Sept. 2, the highest level since April 2015, the Labor Department said on Thursday.

The weekly increase was the largest since November 2012. Data for the prior week was unrevised. A Labor Department official said last week's data had been impacted by Hurricane Harvey, which devastated parts of Texas, including unprecedented flooding in Houston.

Unadjusted claims for Texas surged 51,637 last week as some people found themselves temporarily unemployed. Claims for Louisiana were also affected by the storm and increased 258.

In addition, claims for California, Hawaii, Kansas, Puerto Rico, Virginia and Wyoming were estimated because of the Labor Day holiday on Monday.

Economists polled by Reuters had forecast claims rising to 241,000 in the latest week.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, increased by 13,500 to 250,250 last week suggesting the labor market continued to strength.

The government reported last week that the economy created 156,000 jobs in August, with the private services sector hiring the smallest number of workers in five months.

Economists largely dismissed the slowdown in job growth, blaming it on a seasonal quirk. Over the past several years, the initial August job count has tended to exhibit a weak bias, with revisions subsequently showing strength.

The claims report also showed the number of people still receiving benefits after an initial week of aid fell 5,000 to 1.94 million in the week ended Aug. 26. The so-called continuing claims have now been below the 2 million mark for 21 straight weeks, pointing to shrinking labor market slack.

The four-week moving average of continuing claims slipped 4,000 to 1.95 million, remaining below the 2 million mark for the 19th consecutive week. (Reporting by Lucia Mutikani; Editing by Andrea Ricci)