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Jobless claims resume upward climb

New applications for unemployment benefits jumped in the latest week after falling sharply in the prior week due to seasonal factors.

The Labor Department reported that seasonally adjusted initial claims rose 34,000 to 386,000, a level consistent with modest job growth that's well below what's required to whittle away at the nation's 8.2 percent unemployment rate. 

"The labor market is clearly not recovering. We're still working off a stronger-than-expected first half of the year as corporations continue to hoard cash. We don't expect employment to recover strongly anytime soon," said David Carter, chief investment officer at Lenox Wealth Advisors.

Economists polled by Reuters had forecast claims rising to 365,000 last week. The four-week moving average for new claims, a better measure of labor market trends, fell 1,500 to 375,500.

Claims data is volatile in July because of the timing of the annual auto plant shutdowns for retooling.

Automakers are not embarking on wholesale plant shutdowns, throwing off the model that the department uses to smooth the data for typical seasonal patterns.

A Labor Department official said they were still experiencing volatility related to the auto layoffs that usually happen at this time of year.

Last week's claims data covers the period for the July payrolls count. The four-week average of new claims dropped 12,000 between the June and July survey periods, suggesting a modest improvement in nonfarm payrolls.

The labor market has suffered three months of sub-100,000 job growth as the economy slowed amid a cloud of uncertainty spawned by fears of sharp contraction in fiscal policy and debt problems in Europe.

Federal Reserve Chairman Ben Bernanke told lawmakers on Wednesday that the U.S. central bank, which last month expanded its efforts to spur the economy, would take additional action if officials concluded no progress was being made towards higher levels of employment.

The number of people still receiving benefits under regular state programs after an initial week of aid edged up 1,000 to 3.31 million in the week ended July 7.

Reuters contributed to this report.