For the work week ending July 27, new applications for job benefits rose by a seasonally adjusted 20,000 to 387,000, the Labor Department reported Thursday. That pushed claims to their highest level since the beginning of July.
The increase comes after claims fell sharply in the prior two weeks.
In another report, the Commerce Department said construction spending declined by 2.2 percent in June from the previous month. That pushed down the value of construction projects to $820.8 billion, the lowest level since August 2000.
Treasury Secretary Paul O'Neill, appearing Thursday on CBS'The Early Show, said he remains optimistic about the economy, noting recent improvements in wages.
"We're bent on getting more people back to work and we need some action by Congress to give us some additional steps," O'Neill said, calling again for passage of legislation giving the president greater leeway to negotiate international trade treaties.
Construction activity was weaker in June than many analysts were expecting. They were forecasting a 0.3 percent rise. Construction spending dropping by 2 percent in May, a bigger decline than previously reported.
The weakness in June was led by a 3.4 percent cut in spending on commercial projects, including office buildings and hotels, by private builders. The government also scaled back spending by 3.1 percent, with cuts reported for industrial complexes, highways, schools and hospitals.
Spending on home building by private companies dipped by 0.9 percent.
Thomas Stengle, a statistician with the Labor Department, cautioned against reading too much into the claims figures because they tend to bounce around a lot this time of year.
Auto plants temporarily shut down to retool assembly lines for new models this time of year. Difficulties in adjusting for these seasonal factors can distort the numbers.
The more stable four-week moving average of claims, which smoothes out weekly fluctuations, edged up last week to 386,000. However, the moving average has been below the 400,000 mark, a level associated with weakness in the job market, for seven straight weeks, an encouraging sign.
Nevertheless, the number of workers continuing to draw jobless benefits rose for the week ending July 20, the most recent period for which the information is available, to 3.5 million, suggesting that companies aren't vigorously hiring.
Still, many economists believe that job growth for July will be sufficient to keep the nation's unemployment rate steady at 5.9 percent. But the growth in jobs probably won't be strong enough to bring the unemployment rate down for the month. Economists are forecasting the addition of around 66,000 jobs in July. The government releases the employment report on Friday.
The Federal Reserve, in a survey of business conditions around the country, reported on Wednesday that the recovery is progressing, but that improvements are uneven.
Until companies feel more secure about the recovery, they will be reluctant to make big commitments in new hiring and in capital investment — a key ingredient for the economy's full and sustained recovery, economists say.
After bolting out of the starting blocks at the beginning of the year, the economy lost momentum in the spring, growing at an annual rate of just 1.1 percent. That was down from a 5 percent rate in the first quarter of this year.
Given the slowdown, many economists believe the Fed will leave short-term interest rates at 40-year lows at its next meeting on Aug. 13. The Fed has held rates steady all year long. Growing numbers of economists predict rates will be left alone for the rest of the year.