Economists say the trend in jobless claims suggests marked deterioration in the U.S. jobs market. Initial claims have been above 425k for nine weeks now, and the latest figure is the highest since just after the World Trade Center attacks in September 2001.
Initial claims for unemployment benefits in the United States soared to 493k in the week ending Sept. 20, the Department of Labor reported on Thursday. Continuing claims rose to 3.542 million for the week ending Sept. 13, their highest level since 2003.
Fixed income strategist T.J. Marta from RBC said the spike in claims is "derived partly from the disruption of Hurricane Ike." By comparison, in September 2005 following Hurricane Katrina, claims jumped from 328K to 425K, he noted.
Economist Jennifer Lee from BMO Capital Markets said the trend is "looking pretty ugly" and points towards triple-digit losses in the BLS nonfarm payrolls report for September. She said part of the weakness "definitely reflects Hurricane Gustav in Louisiana and Hurricane Ike in Texas, which, according to the BLS, added approximately 50,000 to the total, and probably spread over a couple of weeks."
The four-week moving average for initial claims is now 462k, up from 446k last week.
"The possibility of further casualties down the pipeline promises to increase the number of job cuts to around 100-120K per month through the end of the year, and thus we look to the initial claims number to start a period of greater acceleration relative to the levels we have been seeing recently," said Ian Pollick, economics strategist at TD Securities.
"The U.S. labor market is under severe duress and this report demonstrates that notion, in spades," he added.
This is the 20th consecutive week that continuing claims have been above the 3 million mark. The four-week moving average is now 3.489 million, up from the moving average of 3.461 million in the previous week.
Claims have recently been higher than normal following new rules introduced by the Department of Labor that made filing for unemployment benefits easier, as well as effects from recent hurricanes.
By Patrick McGee and edited by Stephen Huebl
©CEP News Ltd. 2008