Initial claims for jobless benefits in the United States rose to 371k in the week ending May 10, following an unrevised 365k in the previous week, while continuing claims rose to 3.060 million for the week ending May 3, the Department of Labor reported Thursday.

Rishi Sondhi, economist at RBC Capital Economics, said the report points to continued deterioration in the labour market but it remains unclear whether firms will accelerate their lay-offs.

Sondhi said the base of losses is consistent with 2001 recession levels, but the nonfarm payrolls report has not seen declines of the same magnitude and is not consistent with previous recessions.

"The trend in claims is still upwards and we expect new highs over the next few months as the consumer financial crisis deepens," added Ian Shepherdson, chief U.S. economist at High Frequency Economics, who said the fiscal stimulus package will help retail sales but not the labour market.

Senior economics strategist Charmaine Buskas from TD Securities said that jobless claims "should continue to post higher levels and remain consistent with outright job losses."

The four-week moving average for continuing claims is 3.017 million, the first time the four-week average has been above the 3 million mark since April 2004. The April 26 continuing claims figure was revised at 3.032 million from an originally reported 3.020 million.

The rise in continuing claims indicates it's harder for people to get another job once they've been let go, but Sondhi said some recent economic data gives reasons to be optimistic. He said the U.S. economy certainly isn't strong, but it may be okay.

Prior to the release, Christopher Rupkey, chief financial economist at the Bank of Tokyo-Mitsubishi UFJ, said "the claims data will tell us whether the recession is intensifying or not. The range of good to bad outcomes for the economy is 300K to 400K for initial claims, and 3.0 million to 3.5 million for continuing claims."

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