New claims for unemployment benefits jumped last week to a 16-year high, the Labour Department said on Thursday, providing more evidence of a rapidly weakening job market expected to get even worse next year.

The Government said new applications for jobless benefits rose to a seasonally adjusted 542,000 from a downwardly revised figure of 515,000 in the previous week. That was much higher than Wall Street economists’ expectations of 505,000, according to a survey by Thomson Reuters.

That is also the highest level of claims since July 1992, the department said, when the economy was coming out of a recession.

The four-week average of claims, which smoothes out fluctuations, was even worse: it rose to 506,500, the highest in more than 25 years. In addition, the number of people continuing to claim unemployment insurance rose sharply for the third straight week to more than 4 million, the highest since December 1982, when the economy was in a painful recession.

Those figures partly reflect growth in the labor force, which has increased by about half since the early 1980s. The figures likely will cause some economists to increase their projections for the unemployment rate this year. Many already expect unemployment to reach 7 per cent by early next year and 8 per cent by the end of 2009.

The rate in October was 6.5 per cent, and last year the rate averaged 4.6 per cent.

The Federal Reserve on Wednesday released projections that the jobless rate will climb to between 7.1 per cent and 7.6 per cent next year, according to documents from the Fed’s October 29 closed-door deliberations on interest rate policy.

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