The number of Americans filing new claims for jobless benefits surged last week to a 1 1/2-year high, a sign superstorm Sandy had dented the economy by leaving tens of thousands of people out of work.
Initial claims for state unemployment benefits rose 78,000 to a seasonally adjusted 439,000, the Labor Department said on Thursday. That was well above the median forecast in a Reuters poll of 375,000.
An analyst from the department said several states from the mid-Atlantic and Northeast reported large increases in claims due to Sandy, a mammoth storm that slammed into the East Coast in late October.
The deadly storm left millions of homes and businesses without electricity, although the economic impact of the storm is likely to be temporary.
Economists expect the storm could shave as much as half a percentage point from economic growth in the fourth quarter. However, any lost activity should be made up early next year.
Retail sales data on Wednesday pointed to a softening in U.S. consumer spending early in the fourth quarter. Overall retail sales fell as Sandy slammed the brakes on automobile purchases last month.
The surge in new jobless claims last week was the biggest one-week increase since September 2005.
The four-week moving average for jobless claims, which smoothes out volatility, rose 11,750 to 383,750. Economists generally think a reading below 400,000 points to an increase in employment.
Continuing claims for jobless benefits rose 17,750 in the week ended November 3 to a seasonally adjusted 3.255 million, the highest level since July 2008, the Labor Department said.