Jobless Claims Rise Following Storm

November 16, 2012

Wall Street Journal

SARAH PORTLOCK And ERIC MORATH

WASHINGTON—The number of U.S. workers filing for jobless benefits surged last week as a result of superstorm Sandy, which displaced thousands of Northeast residents and shuttered businesses.

People seeking unemployment benefits increased by 78,000 to a seasonally adjusted 439,000 in the week ended Nov. 10, the Labor Department said Thursday. Economists surveyed by Dow Jones Newswires expected 375,000 new applications for jobless benefits.

A Labor Department analyst said the storm was the cause of the increase because people were without work after schools were closed, factories were flooded and construction sites were stalled. The Labor Department will have more details next week about which sectors were most affected, the analyst said. State-level data are reported with a one week lag.

For the week ended Nov. 3, New Jersey and Connecticut reported increased claims because of Sandy, according to the report. In New Jersey, the claims were primarily from the construction, transportation and accommodation and food-service industries. Meanwhile, power outages in New York contributed to a decrease that week because people couldn't file their claims.

The storm will likely disrupt claims data for the next several weeks, the analyst said.

The four-week moving average of claims—which smooths out volatile weekly data—increased by 11,750 to 383,750. Claims for the week ended Nov. 3 were revised up by 6,000 to 361,000.

Before Sandy hit, the job market had been gradually improving. In October, U.S. payrolls increased by a seasonally adjusted 171,000 jobs, the Labor Department said in a separate report. The unemployment rate, which is calculated from a different survey, was below 8% for the second consecutive month.

Thursday's data showed the number of continuing unemployment-benefit claims—those drawn by workers for more than a week—rose by 171,000 to 3,334,000 in the week ended Nov. 3. Continuing claims, reported with a one-week lag, are at the highest level since July 2008.

The number of workers requesting unemployment insurance was equivalent to 2.6% of employed workers paying into the system in the week ended Nov. 10. The figure was up from the prior week's reading of 2.4%.

A separate report showed that inflation pressure on U.S. consumers eased in October as falling gasoline prices helped offset rising shelter and food costs. The index of consumer prices increased 0.1% in October after jumping 0.6% in each of the prior two months, the Labor Department said. The consumer-price index measures what Americans pay for everything from groceries to hospital stays.

Gasoline prices—which had risen 16.6% from July to September—eased 0.6% in October. The decline helped push overall energy costs down 0.2% despite advancing electricity rates.

Food costs rose 0.2% in October, the fifth consecutive monthly increase, indicating that Americans will likely pay more for their Thanksgiving dinners. Prices for turkey are 5.5% higher than a year earlier.

When removing volatile food and energy costs, consumer prices rose 0.2% last month. That number reflects a 0.3% increase in the shelter index, the largest advance since March 2008, and higher apparel price tags and airfare.

Economists surveyed by Dow Jones Newswires forecast that both overall prices and so-called core prices would rise 0.1%.

Year over year, consumer prices were up 2.2% and core prices rose 2.0%.

The Federal Reserve targets a 2.0% annual inflation rate. Mostly mild inflation in recent years has allowed the central bank to keep its interest rates near zero since late 2008 without the risk of stoking price spikes. Low interest rates are intended to stimulate growth.

Thursday's report showed vehicle prices fell last month, with new-car prices down 0.1% and used-vehicle prices down 0.9%. Used-car prices have fallen 2.1% from a year earlier.

Meanwhile, the index for medical care was unchanged in October, the first time in more than two years that the category didn't rise.

Another Labor report Thursday showed Americans' real average weekly earnings declined for the third consecutive month, falling 0.2% in October. The figure fell because rising prices caused real hourly earnings to fall, but the length of the workweek was unchanged.

Since reaching a peak in October 2010, real average weekly earnings have fallen 1.8%, the Labor Department said.

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