Superstorm Sandy lifts jobless claims
The number of Americans filing new claims for jobless benefits fell last week but remained elevated due to superstorm Sandy, a sign the storm is proving to be a substantial disruption to the labour market.
Other data today showed stronger growth in US manufacturing in November.
Initial claims for state unemployment benefits dropped by 41,000 to a seasonally adjusted 410,000, the Labor Department said. That was in line with the median forecast in a Reuters poll.
The storm has distorted a range of economic indicators, making it harder to gauge the underlying health of the US economy. Economists thought today’s readings nevertheless point to a struggling jobs market.
"There appears to be a noticeable deceleration of growth in the fourth quarter," said Peter Hooper, an economist at Deutsche Bank in New York. "It would not be surprising if some of the new jobless claims are due to underlying weakness in the labour market," he said.
US financial markets showed little reaction to the jobless data as investors focused on developments in Europe and trading slowed ahead of the Thanksgiving holiday tomorrow. US stock futures were up slightly, while Treasury debt prices were flat.
An analyst from the Labor Department said several states were still reporting an increase in claims due to Sandy, a mammoth storm that hit the East Coast on October 29th.
The storm left millions of homes and businesses without electricity, shut down public transportation and led many factories to curtail production. Retail sales fell as Sandy slammed the brakes on car purchases last month.
The data covers the same week when the department collects data for its estimate on hiring during the month, and gives some reason to expect softness in that report due on December 7th, although not all analysts expect a significant impact. Nonfarm payrolls grew 171,000 in October.
"We are expecting things to be in the neighbourhood of what we have seen, maybe with a pullback in light of the hurricane," said Bricklin Dwyer, an economist at BNP Paribas in New York.
The drop in new claims only partially unwinds the 90,000-claim increase registered the prior week. The Labor Department revised upwards its estimate for new claims in the week ending November 10th, to 451,000. Millan Mulraine, an economist with TD Securities in New York, said the storm would continue to distort claims for another few weeks.
However, most analysts think the economic impact of the storm is likely to be temporary.
Growth in the US economy has looked uneven in recent months, with business investment sagging due to fears that Congress will slash the budget deficit next year, while consumer spending and the housing market have looked more robust.
A separate report showed US manufacturing grew in November at its quickest pace in five months, bolstered by a rise in domestic demand.
Financial information firm Markit said its US "flash", or preliminary, manufacturing Purchasing Managers Index rose to 52.4 from a three-year low of 51.0 in October. A reading above 50 indicates expansion.
Output in the sector and domestic new orders also grew at their fastest pace since June, while the pace of hiring in the factory sector was the swiftest in four months.
Some respondents said efforts to rebuild after Hurricane Sandy may have accounted for some of the increased demand.
Another report showed applications for US home mortgages eased last week as interest rates edged up, though demand for new loans improved.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 2.2 per cent in the week ended November 16th.
The MBA's seasonally adjusted index of refinancing applications fell 3.2 per cent. But the gauge of loan requests for home purchases, a leading indicator of home sales, rose for the second week in a row, gaining 2.7 per cent.