WASHINGTON: Superstorm Sandy drove a surge in new claims for US jobless benefits last week and weighed on factory activity in November, providing early signs of how heavily the storm could hit the US economy in the fourth quarter.
Initial claims for state unemployment benefits rose 78,000 to a seasonally adjusted 439,000, the highest level since April 2011, the Labour Department said yesterday. It was the biggest one-week jump since the spike caused by Hurricane Katrina in September 2005.
Severe storms and other natural disasters usually have only temporary impacts on the economies of rich nations like the United States. Many analysts think Sandy’s effects on jobless claims could fade within a few weeks. Yesterday’s data nonetheless reinforced the view that US economic growth took a hit from the storm, if only in the short term.
The US jobs market has had a painfully slow recovery from the 2007-09 recession, although the unemployment rate was at 7.9 percent in October, down four tenths of a point from July.
An analyst from the Labour Department said several states from the mid-Atlantic and Northeast reported large increases in claims due to Sandy, a mammoth storm that slammed into the East Coast in late October.
The storm left millions of homes and businesses without electricity, shut down public transportation and caused widespread damage in coastal communities. Economists expect the storm could shave as much as half a percentage point from economic growth in the last three months of the year, but that should be made up early in 2013.
Retail sales data on Wednesday pointed to a softening in US consumer spending early in the fourth quarter as Sandy slammed the brakes on automobile purchases last month.
Separately, the Philadelphia Federal Reserve Bank said its business activity index slumped to -10.7 from 5.7 the month before. The fall was much steeper than economists’ expectations for a reading of 2.0, according to a Reuters poll.
Any reading above zero indicates expansion in the region’s manufacturing. The survey covers factories in eastern Pennsylvania, southern New Jersey and Delaware.
Reuters
