WASHINGTON - Superstorm Sandy drove the number of people in the U.S. seeking unemployment benefits up to a seasonally adjusted 439,000 last week, the highest level in 18 months.
The Labor Department said Thursday that weekly applications increased by 78,000 mostly because a large number of applications were filed in states damaged by the storm. People can claim unemployment benefits if their workplaces close and they don't get paid.
The storm has affected the claims data for the past two weeks and may distort reports for another two weeks, the department has said.
The four-week average of applications, a less volatile number, increased to 383,750.
Superstorm Sandy hit the East Coast on Oct. 29 and disrupted businesses from North Carolina to Maine. The storm also cut power to roughly 8 million homes and businesses. Some are still without power.
Before the storm distorted the figures, weekly applications had fluctuated between 360,000 and 390,000 since January. At the same time, employers have added an average of nearly 157,000 jobs a month. That's barely enough to lower the unemployment rate, which was 7.9 per cent in October.
There are some signs that the job market is improving. Employers added 171,000 jobs in October and hiring in August and September was stronger than first estimated. The economy has gained an average of 173,000 jobs a month since July. That's up from an average of 67,000 a month in April through June.
The unemployment rate rose slightly in October from 7.8 per cent in the previous month because more Americans began looking for work. That suggest some felt their chances of finding a job had improved. Not all of them found jobs, which pushed up the unemployment rate. The government only counts people as unemployed if they are actively searching for work.
The economy appears to have grown faster over the summer than first thought, based on a handful of positive September reports on inventory growth and trade released this month. Many economists now predict growth at an annual rate of roughly 3 per cent in the July-September quarter, up from the initial estimate of 2 per cent reported last month.
The government releases its second estimate for third-quarter growth on Nov. 29.
Still, many economists say the economy is growing in the current October-December quarter at a weak annual rate below 2 per cent.
The storm combined with cautious consumers to lower retail sales in October. Consumers may also be holding back because of anxiety over big tax increases and spending cuts — known as the "fiscal cliff" — that will take effect in January unless Congress and the White House reach a budget deal by then. Many companies are likely to scale back hiring and investment, too, until the fiscal cliff debate is resolved.