updated 3/12/2009 11:36:03 AM ET 2009-03-12T15:36:03

With layoffs spreading, the number of initial claims for jobless benefits rose last week, while the total number of people continuing to receive benefits set a record high, the government said Thursday.

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The Labor Department reported that first-time requests for unemployment insurance rose to 654,000 from the previous week's upwardly revised figure of 645,000, above analysts' expectations.

The number of people receiving benefits for more than a week increased by 193,000 to 5.3 million, the most on records dating back to 1967. That's the sixth time in the past seven weeks that the jobless claims rolls have set a record high.

The labor market has been hammered as employers, squeezed by cutbacks in consumer and business spending, cut jobs at a rapid pace. Some economists say the unemployment rate could reach 10 percent by the end of this year, from its current level of 8.1 percent.

The four-week average of new claims, which smooths out fluctuations, rose to 650,000, the highest in more than 26 years, though the work force has grown by about half since then.

Separately, the Commerce Department said retail sales fell by 0.1 percent in February, though that drop was much less than the 0.5 percent analysts expected. The government also revised January's performance to show a 1.8 percent rise, the biggest increase in three years and stronger than the 1 percent gain that was originally reported.

Still, analysts don't expect any sustained rebound in consumer spending soon, given the severity of the recession. Consumers have sharply retrenched in the face of falling home and stock prices and soaring unemployment.

As a proportion of the work force, the tally of Americans receiving unemployment benefits is the highest since June 1983, the department said, when the economy was recovering from a steep recession.

The unemployment insurance rolls have risen sharply from a year ago, when only 2.8 million people were receiving benefits.

Jobless claims

An additional 1.4 million people were receiving benefits under an extended unemployment compensation program approved by Congress last year, the department said. That tally was as of Feb. 21, the latest data available.

The rise in continuing claims is a sign that many newly laid-off workers are having difficulty finding jobs.

More job losses were announced this week. Computer maker Dell Inc. said Wednesday that it is laying off workers around the world but would not say where or how many. AMR Corp.'s American Airlines also said Wednesday it will lay off 323 flight attendants on April 1.

National Semiconductor Corp., meanwhile, said it will lay off 1,725 employees, more than one-quarter of its work force, after third-quarter profits fell 71 percent.

Industrial conglomerate United Technologies Corp., which makes Otis elevators and Sikorsky helicopters, said Tuesday it will lay off 11,600 workers, or 5 percent of its work force.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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