First-time filings hit highest level in seven years
WASHINGTON (MarketWatch) -- U.S. weekly jobless claims remained at their highest level in seven years, Labor Department data showed Thursday, as people in the hurricane-hit states of Louisiana and Texas filed for benefits.
Without the hurricane-related claims, filings would have been lower - but still at an uncomfortably high level as they approach half a million, economists say.
For the week ended Sept. 27, seasonally adjusted first-time claims for unemployment benefits rose 1,000, to stand at 497,000 -- the highest since late September 2001. The higher number reflects claims following the damage wreaked by Hurricane Gustav in Louisiana and Hurricane Ike in Texas. Without the hurricane-related claims, initial filings would have been about 439,000 last week, the Labor Department said.
Initial claims ranging from about 300,000 to 325,000 are consistent with healthy job growth, economists say. Readings consistently higher than 350,000 would signal significant weakening in the labor market.
The underlying trend is "disconcertingly high," wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics.
"Payrolls have not fallen as fast as in 2001, though, suggesting the pace of gross hiring has not dropped as much as usual in a recession," Shepherdson wrote. "We doubt this can last in the wake of the market chaos and tightening lending standards, and we still think payrolls will eventually start to fall at a much faster pace than in the past few months."
The four-week average of claims -- a measure of the underlying employment trend -- also increased, up 11,500 to 474,000. This marked the highest since October 2001.
Meanwhile, the number of people continuing to claim benefits remained elevated, many workers' difficulty in finding jobs. Continuing claims have been above 3 million since mid-April.
For the week ended Sept. 20, continuing claims grew by 48,000 to reach 3.59 million and the four-week average of continuing claims also rose, increasing 46,750 to 3.53 million. Continuing claims and the four-week average of continuing claims thus hit the highest respective levels since September and October of 2003.
The Labor Department also said that the insured unemployment rate, which represents the portion of all workers covered by unemployment insurance who are collecting benefits, held steady at 2.7% in the week ended Sept. 20.
The spike in claims comes as Washington continues work on the massive financial-rescue plan to help stabilize markets and the U.S. economy. The Senate approved a plan Wednesday evening, and the House must still take up the proposal.
The claims data also come on the eve of pivotal Labor Department data on the nation's nonfarm payrolls and the unemployment rate for September.