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Jobless claims rise to highest level in 2 months

WASHINGTON - The number of newly laid off workers filing claims for unemployment benefits shot up unexpectedly last week, rising to the highest level in two months.

The Labor Department reported that unemployment claims totaled 324,000 last week, up 10,000 from the previous week, to the highest level since mid-April.

While the big increase was unexpected, analysts said it did not change their view that the labor market remains healthy despite a yearlong economic slowdown caused by a steep slump in housing and troubles in the domestic auto industry.

Analysts noted that even with the increase, claims remain close to their average over the first 51⁄2 months of this year of 319,000.

While some economists said they still look for layoffs to rise as the year progresses, they said last week's upward blip is not a signal that is occurring.

''It will take more than one week to convince us things are really changing,'' said Ian Sheperdson, chief U.S. economist for High Frequency Economics.

The increase last week pushed claims to the highest level since they stood at 325,000 for the week ending April 21. The four-week average for claims rose to 314,500, the highest level since the first week in May. Claims have posted increases for three consecutive weeks.

Overall economic growth slowed to a lackluster annual rate of 0.6 percent in the first three months of this year, the weakest performance in four years. However, growth is expected to have rebounded in the current April-June quarter to a rate of 3 percent or even better.

The Federal Reserve meets next week to review interest rates with most analysts believing the central bank will leave rates unchanged.

The last rate change was a quarter-point increase a year ago. That capped a two-year Fed campaign to push rates higher as a way of slowing the economy enough to reduce inflation pressures.