The Labor Department reported Thursday that new applications filed for unemployment insurance rose by a seasonally adjusted 7,000 to 455,000 for the week ending Aug. 2. The increase left claims at their highest level since late March 2002.
A program to locate people eligible for jobless benefits played a role in the increase, a Labor Department analyst said. However, the analyst couldn't say how much of a role.
The latest snapshot of layoff filings was worse than analysts expected. They were forecasting new claims to drop to around 430,000.
The data disappointed Wall Street. Stocks appeared headed for a lower opening.
The new layoff filings were distorted by the outreach program to notify people that they could qualify for additional benefits under a new law.
When people went to state claims offices to apply for these extended benefits, state officials discovered that some were eligible for - but haven't filed for - their initial unemployment benefits, the Labor Department analyst said. That accounted for some of last week's increase, he said.
Meanwhile, the four-week moving average of claims, which smoothes out weekly fluctuations, rose to 419,500 last week, the highest since mid-July 2003.
The number of people continuing to collect unemployment benefits went up by 31,000 to 3.3 million for the week ending July 26, the most recent period for which that information is available. That was the highest since early December 2003.
Among the companies announcing job cuts in late July or early August were: General Motors Corp., Weyerhaeuser Co., and Starbucks Corp. Bennigan's restaurants owned by privately held Metromedia Restaurant Group, are closing, driving more people to unemployment lines.
Squeezed by high energy prices and fallout from housing and credit troubles, employers clamped down even more on hiring in July. The nation's unemployment rate jumped to a five-year high of 5.7 percent, the government reported last week. Employers cut jobs every month so far this year, driving up losses to 463,000.
Economists expect another half million jobs to be eliminated this year alone. The jobless rate could hit 6.5 percent by the middle of next year.
The country is getting pounded by many negative forces, the Federal Reserve said Tuesday.
"Labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction and elevated energy prices are likely to weigh on economic growth over the next few quarters," the Fed said.
Against that backdrop, the Fed decided to leave a key interest rate steady Tuesday. The Fed can't afford to cut rates anymore because it could aggravate inflation. On the other hand, boosting rates too soon would deal a blow to the economy and the ailing housing market.