New Unemployment Claims See Post-Hurricane Surge

WASHINGTON – New claims for unemployment insurance moved higher last week as laid-off workers who had been prevented from filing because of Hurricane Isabel finally made it into state offices to apply for benefits.

The Labor Department (search) reported Thursday that new applications for jobless benefits rose by a seasonally adjusted 13,000 to 399,000 for the work week ending Sept. 27. That marked the highest level in two weeks.

Around half of the rise was attributed to people who initially couldn't file claims because of disruptions related to the storm, which pummeled the East Coast, but were eventually were able to do so last week, a Labor Department analyst said.

The increase left the level of claims slightly higher than the 395,000 that some economists were forecasting.

In the prior week, claims had dropped by 15,000 to 386,000, but at least half of that decline was attributed to people not being able to file for jobless benefits because of the hurricane, rather than a sign of improvement in the battered labor market, analysts said.

The more stable four-week moving average of claims last week decreased by 5,000 to 403,500. But even with the decline, the level of claims were above 400,000, a level associated with a weak job market. The four-week moving average has been running above 400,000 for five straight weeks, something that economists find discouraging.

Claims have remained stubbornly high even as the economy has strengthened after months of lackluster growth.

Amid signs of an economic recovery, the Federal Reserve (search) last month decided to hold a key short-term interest rate at a 45-year low of 1 percent. Many economists believe policy-makers will leave that rate unchanged again when they meet next on Oct. 28.

Some economists believe the economy, which grew at a 3.3 percent annual rate in the second quarter, could expand at a brisk 5 percent pace in the third quarter and then grow at around at 4 percent rate in the final quarter of this year.

Even as the economy improves, though, the labor market will probably be the last area to get better. Economists believe companies will want to wait until profits get stronger and they have more confidence in the rebound's vigor before they go on a hiring spree.

The nation's unemployment rate, now at 6.1 percent, is expected to nudge up to 6.2 percent for September. The economy also is expected to have lost around 25,000 jobs during that month, which would mark the eighth month in a row of job losses. The government will release the nation's employment report for September on Friday.

The number of unemployed Americans collecting jobless benefits for more than a week rose by 62,000 to 3.7 million for the work week ending Sept. 20, the most recent period for which that information was available. That was the highest level since the end of June and suggests that not a lot of hiring is taking place.