The job market showed continued strains on Thursday when government data said the number of newly laid-off workers filing applications for unemployment benefits fell less than expected last week.
The Labor Department reported Thursday that applications for jobless benefits dropped to 450,000, down by 10,000 from the previous week. That was a smaller decline than had been expected and left the four-week average for claims at the highest level in six years.
The big jump in the four-week average for claims was attributed to a number of factors, including a surge in layoffs and increased publicity surrounding an extension of benefits provided by a law Congress passed in June.
The four-week average reached 440,500, up 19,500 from last week’s revised average of 421,000. A year ago, that number stood at 315,500.
The number of people continuing to receive unemployment benefits jumped 114,000 to 3.4 million for the week of Aug. 2, the most recent period for which that information is available.
Wall Street economists had expected that number to drop to 3.3 million.
Higher energy prices and tight credit markets are squeezing employers, who have cut jobs every month this year. The unemployment rate rose to a five-year high of 5.7 percent in July, the government said earlier this month.
Several large companies announced layoffs earlier this week, including Wachovia Corp., the nation’s fourth-largest bank. It said Monday it will cut 600 additional jobs. Ford Motor Co. said it will eliminate 300 positions.
The Labor Department also reported Thursday consumer prices jumped 0.8 percent in July. Large increases in food and energy costs has inflation running at the fastest pace in 17 years.
The combination of a slowing economy and rising inflation puts the Federal Reserve in a tough spot. The Fed can tame higher prices by increasing the short-term interest rate it controls, but it may be reluctant to do so since higher rates can further slow the economy.