Initial claims for unemployment insurance surged 71,000 to 398,000 from the prior week. Consensus expectations had been for a rise to 345,000.

The Labor Department indicated that at least 68,000 of the new claims were directly related to Hurricane Katrina and that number will most likely be revised upward next week as state workers make their way to distant relief shelters.

The four-week moving average of initial claims rose to 340,750 (0.6% y/y).

Continuing claims for unemployment insurance rose 20,000 following a deepened 28,000 decline the week prior.

The insured unemployment rate remained at its four-year low of 2.0% for the ninth consecutive week.

The Recession of 2001 and Unemployment Insurance Financing from the Federal Reserve Bank of New York is available here.