updated 6/22/2006 9:00:26 AM ET 2006-06-22T13:00:26

The number of Americans filing claims for unemployment benefits rose by the largest amount in five weeks, suggesting the slowing economy is beginning to show up in a weaker employment market.

Major Market Indices

The Labor Department reported that 308,000 people filed for jobless benefits last week, a bigger-than-expected increase of 11,000 from the previous week.

Analysts, who closely watch jobless claims as a signal for where the labor market is headed, believe that job growth will weaken in coming months and layoffs will rise as businesses adjust their hiring plans in the face of an expected economic slowdown.

The increase in benefit applications was in part an adjustment after two weeks in which claims had unexpectedly declined. Those declines were attributed in part to problems making seasonal adjustments in the claims data in weeks surrounding a holiday.

Claims offices in many states were closed for Memorial Day, giving laid-off workers one less day to file claims.

The increase of 11,000 was the biggest rise since an increase of 19,000 applications in the week ending May 13. The 308,000 total claims was the highest level since claims hit 337,000 in the week ending May 27.

The overall economy expanded at a rapid clip of 5.3 percent in the first three months of the year, but that growth rate is expected to slow to around 3 percent in the current quarter as consumers struggle with rising interest rates, soaring gasoline prices and cooling home sales.

Signs of a slowdown have already shown up in a surprisingly weak increase of just 75,000 new payroll jobs in May — 100,000 below what economists had expected.

The jobless claims report showed that for the week ending June 10, 40 states and territories saw increases in claims applications while 13 saw a drop in applications.

The biggest decline occurred in Texas, a fall of 2,065 applications, which reflected fewer layoffs in the trade, service and manufacturing industries.

Nine states had increases in filings of 1,000 or more, led by Pennsylvania, which had a gain of 5,425 applicants, an increase that was attributed to higher layoffs in the transportation, leather goods, electrical equipment and service industries.

North Carolina had an increase of 3,761 claims, reflecting higher layoffs in the textile, furniture, chemical and lumber industries. California had an increase of 2,533 layoffs as jobs were cut in service industries.

The state data is not seasonally adjusted and it also lags behind the national claims data by one week.

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