The number of newly laid-off U.S. workers filing claims for unemployment benefits rose unexpectedly last week, while the tally of continuing claims fell.
Despite the increase in new claims, they remain below peak levels above 600,000 where they were stuck for most of this year. Economists see the decline as a sign layoffs have eased in recent months.
The Labor Department says initial claims increased to a seasonally adjusted 558,000, from 554,000 the previous week. Analysts expected new claims to drop to 545,000, according to Thomson Reuters.
The number of people remaining on the benefit rolls, meanwhile, fell to 6.2 million from 6.34 million the previous week. Analysts had expected a smaller decline. The continuing claims data lags initial claims by one week.
The four-week average of initial claims, which smooths out fluctuations, rose by 8,500 to 565,000. That reverses six straight weeks of decline.
Initial claims reflect the pace of layoffs by employers. The department last week said companies cut 247,000 jobs in July, a large amount but still the smallest number in almost a year.
The unemployment ratein July from 9.5 percent, its first drop in 15 months.
Claims fell steeply last week, however, when the data were no longer affected by the distortions.
Still, initial claims remain far above the roughly 325,000 that economists say is consistent with a healthy economy. New claims last fell below 300,000 in early 2007.
Including federal emergency benefit programs, 9.25 million people received unemployment compensation in the week ending July 25, the latest data available. That's down from a record total of 9.35 million the previous week. Congress has added up to 53 extra weeks of benefits on top of the 26 typically provided by the states.
Meanwhile, retail sales outside of autosin July, underscoring concerns about the timing and durability of a recovery from the worst recession since World War II.
The Commerce Department says retail sales fell 0.1 percent last month, a much worse performance than the 0.7 percent gain that economists had expected.
While autos, helped by the start of the Cash for Clunkers program, showed a 2.4 percent jump - the biggest in six months - there was widespread weakness elsewhere with gasoline stations, department stores, electronics outlets and furniture stores all reporting declines.