The Labor Department said Thursday that new jobless claims jumped unexpectedly last week. And the number of people continuing to receive unemployment aid rose more than expected.
The figures indicate that jobs remain scarce even as the economy shows some signs of recovering from the longest recession since World War II.
A revised reading on gross domestic product -- the broadest measure of the nation's output -- said the economy posted a 5.5 percent annualized decline from January through March. That was slightly better than the 5.7 percent estimate made a month ago. Economists generally think the economy is shrinking at a slower pace -- about 2 percent -- in the current quarter.
The main forces behind the small upgrade in the first quarter: Businesses didn't cut stockpiles of goods as much, and imports dropped more sharply than previously estimated.
On Wall Street, investors shrugged off the unexpected rise in jobless claims and focused on positive earnings reports from homebuilder Lennar Corp. and home furnishings store Bed Bath & Beyond Inc. The Dow Jones industrial average added about 145 points in afternoon trading. Broader indices also rose more than 1 percent.
Initial claims for jobless benefits rose last week by 15,000 to a seasonally adjusted 627,000. Economists had expected a drop to 600,000.
Several states reported more claims than expected from teachers, cafeteria workers and other school employees, a Labor Department analyst said.
The number of people who are continuing to receive unemployment insurance rose by 29,000 to 6.74 million, slightly above analysts' estimates of 6.7 million. The four-week average of claims was largely unchanged, at 616,750.
Most economists still expect the number of initial unemployment insurance claims, which reflects the level of layoffs, to decline slowly in coming months as the recession bottoms out.
"We still firmly believe that the underlying trends in claims is downwards, but it is slow and uneven," Ian Shepherdson, the chief U.S. economist for High Frequency Economics, wrote in a client note.
The number of people continuing to receive unemployment aid remains below the peak of 6.8 million reached May 30. That means job losses are likely slowing, economists said.
Meanwhile, the rebound in consumer spending in the first quarter was slightly less vigorous than previously reported. Consumers boosted their spending at a 1.4 percent rate, down from a 1.5 percent growth rate estimated last month.
Still, that marked the strongest showing in nearly two years and a huge improvement from the fourth quarter, when skittish consumers slashed spending by the most in nearly three decades.
The nation's unemployment rate hit a quarter-century peak of 9.4 percent last month when employers eliminated 345,000 jobs. Joseph LaVorgna, the chief U.S. economist at Deutsche Bank, forecasts that employers will have cut a net total of 325,000 jobs this month and the unemployment rate will rise to 9.6 percent.