Katrina Pushes Claims Higher, Leading Indicators Fall

- Initial Jobless Claims for last week rose to 432K versus estimates of 450K and an upwardly revised 424K the prior week.
- Continuing Claims rose to 2666K versus estimates of 2690K and 2578K prior.
- Leading Indicators for August fell .2% versus estimates of a .3% fall and a .1% decline in July.

BOTTOM LINE: Workers dislocated by Hurricane Katrina pushed first-time claims for unemployment benefits to the highest in more than two years, Bloomberg reported. About 103,000 claims last week were from people affected by the hurricane. In total, Katrina has been responsible for 214,000 jobless claims so far. The four-week moving-average of claims rose to 376,250 from 347,250 the prior week. The insured employment rate, which tracks the US unemployment rate, rose to 2.1% from 2.0%. I expect jobless claims to make another push higher next week as more Katrina/Rita victims file.

The index of leading US economic indicators fell in August for a second straight month as rising gasoline prices sapped consumer confidence even before Hurricane Katrina struck. Five of the ten components of the index were actually positive. The declines in consumer confidence and building permits were mainly responsible for the overall decline. I expect these two components to boost the index during the fourth quarter.