WASHINGTON(Reuters) – The number of U.S. workers filing new claims for joblessbenefits rose to their highest in seven years due to the impact ofhurricanes Ike and Gustav, the government said in a report on Thursday.
The number of initial jobless claims was 497,000 in the week endedSeptember 27, the highest since 517,000 in the week ended September 29,2001 and above Wall Street economists’ forecasts of 475,000.
"It is estimated that the effects of Hurricane Gustav in Louisianaand the effects of Hurricane Ike in Texas added approximately 45,000claims to the total," the Labor Department said in its weekly report.
U.S. stock index futures extended losses after the rise in jobless claims, and Treasury bond prices gained ground.
Economists said the report showed the economy was being rattled byforces other than the hurricanes, adding that the numbers were at highlevels even when the impact of the storms was filtered out.
"The underlying claims reflect an upward trend in unemployment,"said Dana Saporta, economist at Dresdner Kleinwort Securities LLC inNew York.
"The unemployment rate may settle back to 6 percent temporarily dueto the teenagers going back to school from their summer job search,"Saporta said.
But "our view is the unemployment rate will peak about 6.7 percent next year," Saporta said.
Steve Goldman, market strategist at Weeden and Co. in Greenwich,Connecticut, agreed "the economic picture is going to get worse," butthe stock market’s 9-percent drop last month showed investors alreadyknow that.
The four-week average of new jobless claims, a better gauge ofunderlying labor trends because it irons out week-to-week volatility,rose to 474,000 to 462,500 the week before.
That was also the highest reading in seven years, or since October 27, 2001, when it was 480,750, the department said.
The measure has mounted steadily as the U.S. housing slump andresulting strain in the financial services industry has chilled growthand crimped hiring.
The number of people remaining on the benefit rolls after drawing aninitial week of aid increased 48,000 to 3.591 million, the highestsince the week ended September 6 2003.
Analysts had estimated so-called continued claims to be 3.55million. It was the 23rd straight week that claims were above 3million, in another sign that the slowing economy is making it harderfor U.S. workers to find jobs.
(Reporting by Doug Palmer in Washington and Richard Leong and Steven C. Johnson in New York, Editing by Chizu Nomiyama)
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