Strategy

Charley Horse for Jobless Claims

The recent hurricane may have been responsible for at least half of a larger-than-expected rise in initial unemployment claims.
Ed ZwirnAugust 27, 2004

In an eagerly anticipated report issued yesterday by the Department of Labor, seasonally adjusted initial unemployment claims for the week ending August 21 stood at 343,000, an increase of 10,000 from the previous week’s revised figure of 333,000.

The four-week moving average was 336,750, a decrease of 750 from the previous week’s revised average of 337,500.

On a non-adjusted basis, claims for the period stood at 272,894, an increase of 5,131 compared with the prior week, according to the report.

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Economists had expected an increase of just 4,000 initial unemployment claims, according to reports by the Associated Press and Moody’s Investors Service. The AP, quoting a Labor Department official, added that at least half of the workers who filed new claims were out of a job because of Hurricane Charley.

Moody’s Kamalesh Rao, in a statement issued prior to the Labor Department release, wrote that “the weakness of jobs growth in the past couple of months has taken quite a bit of shine off of the overall economic outlook.” Rao added that “there is not a real reason to believe that claims could post a serious decline in the coming weeks.” While the 4,000 consensus rise for the claims figure would have in and of itself proved “minuscule
compared to the normal volatility of weekly claims, any gain would be some degree of reversal from the declines of the past three weeks.”

On the other hand, that analyst wrote that “revenues and corporate health, both of which tend to correlate with increased payrolls, are very much on an upswing.” Added Rao, “Fundamentals still point to a swifter pace of jobs growth this month.”

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