The number of laid-off workers filing claims for unemployment benefits shot up last week to the highest level since late November.
The Labor Department reported that a total of 329,000 newly unemployed workers filed applications for jobless benefits, an increase of 10,000 from the previous week.
The total number of jobless claims was the largest since 358,000 claims were filed the week of Nov. 25 and the advance was well above the increase analysts had been expecting.
But even with the latest increase, the third consecutive weekly rise, claims continue to be at a level indicating a generally healthy labor market despite a slowing economy. The four-week moving average for weekly claims edged up to 317,500, compared to 316,250 the previous week. It was the highest level for the four-week average since Dec. 16.
Employers have been reluctant to lay off existing workers although they have trimmed plans to hire new workers in the face of the serious housing slump that has depressed overall economic growth.
Analysts believe that when the unemployment report is released on Friday it will show that the jobless rate remained stable at 4.5 percent in December as businesses created 110,000 new jobs. That would be down from 132,000 jobs added in November.
The economy slowed to a lackluster growth rate of just 2 percent in the summer as a steep slide in housing construction trimmed 1.2 percentage points from growth. Analysts believe housing subtracted a similar amount from growth in the final three months of this year and will continue to depress activity through the middle of 2007.
In addition to the weakness in housing, auto manufacturers have also been struggling to reduce a high backlog of unsold vehicles.
However, analysts say there is a slim chance of a recession as a result of the problems in housing and manufacturing. They also say they believe the slowdown will cause the jobless rate to rise to around 5 percent this year but think economic activity will pick up in the second half of 2007.
For the week ending Dec. 23, a total of 319,000 claims were filed. In that week, 39 states and territories reported an increase in claims and 13 had a decrease with one reporting no change.
The increase in claims was led by Indiana where claims rose by 9,544, a gain attributed to layoffs in autos and other manufacturing companies.
The biggest drop in claims occurred in Tennessee, a decline of 3,157. That improvement was attributed to fewer layoffs in construction, service and manufacturing industries.
The state data lags the national data by one week and is not adjusted for seasonal variations.