Meanwhile, demand for expensive manufactured goods plunged during August, dropping far below expectations in a broad-based decline involving nearly every sector.
Even accounting for the roughly 50,000 claims that the government said were related to Hurricanes Gustav and Ike, the trend remains very weak for labor markets at a time when the crisis on Wall Street threatens to pull the economy into a deeper downturn.
Initial claims for jobless benefits jumped 32,000 on a seasonally-adjusted basis to 493,000 in the week ended Sept. 20, the Labor Department said in its weekly report Thursday. That's the highest since Sept. 29, 2001. Economists surveyed by Dow Jones Newswires had expected claims would fall by 5,000.
A Labor Department analyst said the hurricanes are producing an "eye-popping" number. Though the government didn't provide exact figures for each state in the latest week -- that breakdown comes with a one-week lag -- the analyst said both Texas and Louisiana posted "fairly sizable" increases in claims.
The 50,000 estimate for the hurricane effect is not seasonally adjusted. Once that number is put through the adjustment process, the effect on the seasonally-adjusted number would be closer to 60,000.