Northeast Storm Spurs Surge of Jobless Claims

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 increase since a spike caused by Hurricane Katrina in September 2005.

Because the storm’s impact is expected to be temporary, the data gave few clues as to the underlying health of the nation’s economy. But it appears the short-term hit could be greater than economists previously thought.

“We will likely see a step back in job growth,” Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pa. The nation’s jobs market has had a painfully slow recovery from the 2007-09 recession and the unemployment rate remains near 8 percent.

In addition to the storm, the economic recovery is laboring against the uncertainty over the path of federal budget policy.

Economic growth is expected to slow sharply in the fourth quarter as businesses and consumers hold back on purchases as a result of fears of the impact of mandated tax increases and spending cuts, a Reuters poll showed on Thursday.

Economists expect job growth in the United States to slow to an average 144,000 jobs a month over the final three months of the year 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 new filings for unemployment benefits last week because of he storm.

Retail sales data on Wednesday pointed to a softening in consumer spending early in the fourth quarter as Sandy discouraged automobile purchases last month.

Separately, data from the Philadelphia Federal Reserve Bank showed manufacturing in the mid-Atlantic unexpectedly contracted this month. The Philadelphia Fed’s business activity index slumped to -10.7 from 5.7 the month before.

Any reading below zero indicates a decline in the region’s manufacturing. The storm led firms in the region to reduce activity by about two days on average, the Philadelphia Fed said.

The Labor Department said in another report that the Consumer Price Index edged up just 0.1 percent last month, with a rise in shelter costs offsetting a drop in gasoline prices.

Article source: http://www.nytimes.com/2012/11/16/business/economy/sagging-economic-data-reflect-storms-impact.html?partner=rss&emc=rss