More than 50,000 claims from Texas fed a giant and surprisingly unexpected 62,000 jump in initial claims for the September 2 week to 298,000, a week that marks the first from the effects of Hurricane Harvey's strike on Houston. Claims in Texas totaled an unadjusted 51,637 vs usual levels just above 10,000. Despite the disruption of the storm, claims for Texas were not estimated by the Labor Department unlike, however, six other states including California where estimates, reflecting delays tied to Labor Day, had to be made. Judging by prior patterns following other major hurricanes, initial claims levels are likely to remain highly elevated for at least several weeks before easing back.
As those filing initial claims return quickly to their jobs, continuing claims are likely to show less effects from the hurricane. Continuing claims were very low going into the hurricane, down 5,000 in lagging data for the August 26 week to 1.940 million with the 4-week average at 1.948 million which is the lowest showing since mid-June. The unemployment rate for insured employees is only 1.4 percent.
Forecasters missed badly in this report, expecting delays in Texas filings that didn't happen. Hurricane effects, however, will not register in the August employment report which was sampled at mid-month before the storm hit. But Harvey's effects on initial claims promise to be extreme in the coming weeks with its ultimate effect on the September employment report unknown. Also unknown is the future effects of Hurricane Irma which has already swept Puerto Rico (whose data is included in the claims report) and is bearing down on Florida.
Recent History Of This Indicator
The effects of Hurricane Harvey are not expected to be much of a factor in jobless claims for the September 2 week. Forecasters sees initial claims coming in at 241,000, up only slightly from 236,000 in the August 26 week. Yet the high estimate, at 255,000, does project an early hit.