US jobless claims soar to year high, hit by Helene and auto cuts

Applications for U.S. unemployment benefits rose last week to a more than one-year high, reflecting notable increases in Michigan and states hit by Hurricane Helene.

Initial claims increased by 33,000 to 258,000 in the week ended Oct. 5, surpassing all estimates in a Bloomberg survey of economists. On an unadjusted basis, more than half of the advance was tied to states affected by Helene, including North Carolina and Florida.

Michigan, home to a number of auto assembly plants, led all states with a nearly 9,500 increase in applications — the most since the first week of July. 

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Stellantis, the owner of the Jeep and Ram brands, has announced plans to eliminate jobs at factories in the U.S. this year, and laid off almost 200 workers at its Sterling Heights, Michigan, truck plant at the end of last month. Ohio, where the carmaker has factories, also saw a jump in claims last week.

The jobless claims data are likely in for a stretch of volatility in the wake of hurricanes Helene and Milton, which landed in Florida on Wednesday night, complicating efforts by the Federal Reserve to accurately gauge underlying developments in the U.S. labor market. While many people in the southeastern U.S. are unable to work because of the storms' destruction, some may also have difficulty or delay applying for unemployment benefits.

"The fallout from Helene in terms of people filing for unemployment benefits is likely far from done, and now the impact from Milton will also probably create an additional temporary bulge in the figures," said Stephen Stanley, chief U.S. economist at Santander Capital Markets. 

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"The hurricane influence is not unusual for this time of year, but the scope of Helene's destruction points to a heavy and prolonged bulge in initial claims," he said.

The four-week moving average of new applications, a metric that helps smooth out volatility, rose to 231,000. 

Continuing claims, a proxy for the number of people receiving benefits, rose to 1.86 million in the previous week, according to Labor Department data released Thursday. 

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Before adjusting for seasonal factors, initial claims also rose last week. Other Southeastern states affected by Helene that saw increases in applications were South Carolina, Tennessee and Georgia.

Michigan saw a back-to-back jump in weekly filings that amounted to 10,667 in total over the last two periods. The increase in the week ended Sept. 28 was due to layoffs in manufacturing and management of companies, according to the release. There was no commentary about last week.