New Jobless Claims Rise by 21,000
The number of Americans filing new claims for unemployment benefits rose by a higher-than-expected 21,000 last week as hurricane-related applications increased, government data showed Thursday.
Separately, Dallas Federal Reserve President Richard Fisher said Thursday that core inflation was near the top of its acceptable range, echoing remarks he made this week that signal more Fed rate hikes to come.
Initial claims for state unemployment aid rose to 390,000 from an upwardly revised 369,000 the previous week, the Labor Department said. Wall Street had forecast 370,000 new claims. The previous week’s claims were initially reported at 356,000.
“The number of jobless claims was higher than expected, but we should all be prepared for surprises in the economic data for the next couple of months,” said Patrick Fearon, senior economist at A.G. Edwards & Sons in St. Louis.
Without accounting for seasonal factors, initial jobless claims linked to hurricanes Katrina and Rita totaled 74,000 last week, up from 70,000 the previous week, a Labor Department analyst said.
The running total of claims resulting from the two storms now stands at 363,000, but economists are reluctant to place too much faith in data that have been so badly distorted.
“The hurricanes were so big and disruptive that it would be hard to accurately gauge what the impact of them will be on the data until a couple of months have passed,” Fearon said.
The claim data come on the eve of the September employment report but were gathered after that survey was conducted and won’t affect the numbers.
The job outlook will be the first major government report to gauge the effect of Hurricane Katrina on the labor market. It is expected to show a loss of 129,000 to more than 170,000 jobs.
Fed official Fisher, appearing in Waco, Texas, said that “readings on core inflation have been within the acceptable range of 1% to 2%, but they are edging closer to the upper end of the Fed’s tolerance zone, with little inclination to go in the other direction.” Those comments were similar to those Fisher made Tuesday, which helped spark a stock market sell-off.
“As a result, we are in a tightening phase of monetary policy,” Fisher said. He is a voting member of the Fed’s policy committee and backed its decision Sept. 20 to raise rates by a quarter percentage point to 3.75%.
Markets are betting that the central bank will raise rates to 4% at its next meeting, on Nov. 1, but are split on how much further it will go in its campaign to make credit more expensive.
Fisher emphasized that inflation pressures were building and were more of a source for concern than the damage done to growth by the two hurricanes, which hit the Gulf Coast in August and September.
