Jobless Claims See Largest Jump in 10 Years

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The number of Americans filing new claims for jobless aid shot up by 71,000 last week, the biggest jump in nearly 10 years, as workers displaced by Hurricane Katrina (search) sought to join the benefit rolls, the government said on Thursday.

The rise in first-time claims for state unemployment aid, among the first economic data to capture the human toll of the devastating storm, brought initial filings in the week ended Sept. 10 to 398,000, the highest level in two years.

The Labor Department (search) estimated that 68,000 of those claims were related to Katrina, which slammed into the U.S. Gulf Coast on Aug. 29. However, it cautioned that it was unable to process the huge surge in claims that were filed as state workers waded into evacuee shelters to log applications.

"Due to the unprecedented volume of claims filed in the affected areas and due to the unconventional methods used in filing, the numbers that are reported do not truly reflect the number of claims filed," a department analyst said.

He said the department could not offer a "ballpark" figure on how many claims had been collected but not yet captured in the department's report. "We are expecting an upward revision in the following week," he said.

Forecasts on Wall Street (search) had centered on a guess that initial claims would rise to 350,000 from the 319,000 initially reported for the prior week. However, Hurricane Katrina led to a wide dispersion of projections — from a low of 320,000 to a high of 800,000.

The increase in initial claims was the largest for any week since January 1996, when blizzards blanketed the East Coast.

The big jump pushed a four-week moving average of claims up by 19,750 to 340,750, the highest level in nearly a year. Economists usually track the less-volatile moving average to get a better sense of underlying job-market trends.

The number of workers who continued to file for benefits after an initial week of aid rose by 20,000 to 2.59 million. But that number is certain to swell as workers displaced by Katrina join the rolls.

States provide unemployment benefits for up to 26 weeks, but lawmakers are already mulling a federal program to extend aid for an additional 13 weeks in the wake of the storm. Congress passed similar extensions amid the jobless recovery from the 2001 recession.