The number of Americans applying for new unemployment benefits jumped last week as Hurricane Harvey pounded Houston and 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.
The agency said Hurricane Harvey affected initial claims, which posted their largest one-week jump since November 2012 and hit their highest level since April 2015, when they also were at 298,000. Jobless-benefit applications surged last week in Texas, which bore the brunt of the storm.
Claims have remained at historically low levels for several years, a sign of underlying health in the labor 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 the hurricane will cause economic disruptions including significant job losses, at least temporarily.
“Claims will rocket over the next couple of weeks as people who have lost their job as a result of Hurricane Harvey file for unemployment benefits,” Pantheon Macroeconomics chief economist Ian Shepherdson said last week.
He noted claims jumped by 96,000 in one week after Hurricane Katrina in 2005, and “the population of the New Orleans metro area is only about one fifth that of Houston.”
It could 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.
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 per 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.
Source: Dow Jones