U.S. jobless claims rise on impact of Hurricane Harvey, claims likely to remain elevated in weeks ahead

U.S. initial jobless claims rose in the week ended 2 September, coming above expectations. Jobless claims rose to 298k, as compared with consensus expectations of 245k. Earlier episodes of hurricanes indicate that jobless claims usually increase after the landfall. Hurricane Harvey had made landfall late in the day on 25 August, therefore, it is not surprising to see a rise in claims.

Disruptions to employment due to the hurricane are likely to be felt in the short run, thanks to the halting or trimming of production in some industries, stated Barclays in a research report. Therefore, claims are likely to remain at elevated levels in the weeks ahead as well, until activity returns to a normal rate in the impacted areas. Meanwhile, continuing claims eased to 1940k for the week ended 26 August. The insured jobless rate continued to be the same at 1.4 percent.

State wise, the rise in claims was driven by Texas, where Hurricane Harvey made landfall, affirming the projections of weather-related disruptions. Jobless claims in the state increased by 51.8k in the week ended 2 September. Michigan also recorded a larger-than-normal rise in claims. The remaining states registered just modest changes.

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