The U.S. economy softened in August even before Hurricane Katrina struck, and the storm sent first-time unemployment claims to a two-year high, according to reports released Thursday.
The index of leading indicators slid 0.2% after a revised 0.1% decline in July, the first back-to-back drops since 2001, the New York-based Conference Board said.
Only three of 10 components in the leading indicators index made negative contributions, but the biggest -- lower consumer expectations -- was a hefty one. That trend has continued into September, according to the latest University of Michigan sentiment survey.
Katrina’s aftermath continued to roil a job market that had been showing improvement before the storm struck.
The Labor Department said the number of Americans applying for first-time unemployment benefits rose to 432,000 in the week ended Saturday, the most since July 2003 and up from a revised 424,000 a week earlier. The previous week’s claims had been originally reported at 398,000.
For several months before Katrina, weekly claims had hovered above 300,000, consistent with a string of solid monthly increases in payroll figures.
“Katrina appears to account for the entire increase relative to the preceding baseline of about 320,000,” economists at Goldman Sachs said in a research note.
Unadjusted for seasonal factors, jobless claims linked to Katrina has totaled 194,000 in the last two weeks.
The four-week moving average of claims, considered a more reliable barometer because it smoothes out weekly volatility, rose to 376,250 -- its highest since Nov. 8, 2003 -- from 347,250 the week before.
Reuters and Bloomberg News were used in compiling this report.