Washington - The number of Americans filing new weekly claims for jobless benefits jumped unexpectedly to 500 000, the highest level in nine months, the government said Thursday, threatening recovery hopes.
The soaring claims "compels us to act," President Barack Obama said, demanding lawmakers pass a stalled bill that will end taxes on key investments in small businesses which create two of every three new jobs in the country.
The labour department said jobless benefit claims in the week to August 14 increased by 12 000 from the previous week's revised figure of 488 000.
The latest figure came well above most economists' expectations of 475 000.
The four-week moving average for the jobless claims, a less volatile indicator than the week-to-week figures, rose to 482 500, an increase of 8 000 from the previous week's revised average.
It was the third straight week in which claims have risen, and underscores the threat posed by unemployment on the US recovery from the worst recession in decades.
It also raised the possibility of authorities implementing more stimulus measures to help contain the near double-digit unemployment rate.
"Overall, this week's data on initial claims is troubling and it may put pressure on the Federal Reserve to put its contingency plan into motion," said Ryan Sweet, economist with Moody's Economy.com.
"The labor market is weakening, which is making it more difficult to be sanguine about the job market and the recovery's staying power," he said.
The 40 000 increase in claims for jobless benefits over the past three weeks suggests businesses have trimmed payrolls in response to slower growth.
Unemployment is the biggest concern of Obama, whose Democratic Party faces the possibility it could lose control of Congress in mid-term elections in November.
Reacting to the latest figures on Thursday, Obama slammed opposition Republican senators for blocking a $30bn plan to help community banks boost lending to small businesses.
"There will be plenty of time between now and November to play politics," he said.
"Small business owners I met with this week, the ones that I've met with across the country this year, they don't have time for political games," he said.
He pressed the lawmakers to break the deadlock when they consider the bill again next month after a summer recess.
The Federal Reserve warned last week that the economic recovery from a brutal recession would be "more modest" than expected, with growth slowing in recent months.
In an effort to bolster market confidence, the central bank announced a return to crisis-era stimulus spending.
It said it would use proceeds from maturing bonds in its mortgage portfolio to buy more Treasury debt in a bid to bring down long-term interest rates.
"We expect consumers to continue to react by maintaining tight control over their spending as the jobs news raises the fear level that they might lose their job at some point in the future," said Frederic Dickson, chief market strategist at DA Davidson & Co.