The number of Americans filing first-time claims for jobless benefits dropped last week 79,000, a sign that many workers idled by Hurricane Katrina completed their applications for benefits after the disaster.
Claims fell to 356,000 in the week ended Sept. 24 from a revised 435,000 the prior week, the Labor Department said in Washington. About 60,000 claims last week came from people who lost their jobs because of Katrina, down from 108,000 the week before, a department spokesman said.
“This suggests the bulk of the Katrina distortion is behind us,” said Rick MacDonald, research director at Action Economics LLC in Los Angeles, before the report.
Economists expected claims to total 418,000 last week, according to the median of 38 forecasts in a Bloomberg News survey. Estimates ranged from 350,000 to 500,000. Claims were first reported at 432,000 the previous week.
The four-week moving average of claims, a less volatile measure, rose to 385,500 from 377,000 the week before.
Katrina, which left more than 1,000 dead in its wake, may cost the economy 400,000 jobs and as much as one percentage point of growth in the second half of the year, the Congressional Budget Office said earlier this month, reports Bloomberg.
According to USA Today, in the aftermath of the two hurricanes, however, economists are predicting that production and hiring will take a hit, slowing overall economic activity in the second half of this year to a pace of around 3%. Before the hurricanes, second-half growth was expected to top 4%.
Federal Reserve Chairman Alan Greenspan earlier this week said the central bank will be closely monitoring the economy to assess the impact of the two deadly hurricanes, which slammed into the Gulf Coast over the last month. The disasters destroyed businesses, homes and hobbled essential oil and gas facilities, which has led to elevated energy prices rising even higher.
Economists expect economic growth in the second half of this year will be reduced as much as 1 percentage point as high energy prices crimp consumer and business spending, vital ingredients for healthy economic activity.
Hiring is expected to slow. The nation's payrolls for September will probably show a loss of several hundred thousand jobs; the unemployment rate — now at a four-year low of 4.9% — is expected to rise. The employment report for September is released by the government next week.
Rebuilding, once underway, should help energize overall economic activity and the jobs climate, though probably not until next year.