WASHINGTON - FRESH signs of weakness in US job markets on Thursday underlined the strains faced by a recession-struck US economy that contracted slightly less in the first quarter than previously thought.

The Labour Department said the number of US workers filing new claims for unemployment benefits last week jumped unexpectedly by 15,000 to a higher-than-forecast, seasonally-adjusted total of 627,000.

Continued claims, which gauge how many Americans were still on jobless rolls after an initial week of claims, rose 29,000 to 6.738 million in the week ended June 13, the latest period for which the data was available.

The worse-than-expected jobs data outweighed a Commerce Department report showing gross domestic product, the gauge of total output within US borders, contracted at a 5.5 per cent annual rate in the first quarter instead of 5.7 per cent.

That followed contractions in national output of 6.3 per cent in last year's fourth quarter and 0.5 per cent in the third quarter. The first estimate for second-quarter US economic performance will not be available for another month.

'It's all about jobs and people's ability to pay their mortgages,' said Glen Capelo, co-head of rates at BroadPoint Capital in New York. 'The financial system in conjunction with the economy are still in trouble.'

The GDP figure was the final reading for the first quarter. The Commerce Department initially said it shrank 6.1 percent, then revised that to 5.7 percent and finally to a 5.5 percent fall.

It is expected to slip again in the second quarter ending June 30, though less severely than in the first quarter.

'The economic data we've seen so far for the second quarter suggest the preliminary number for the second quarter will show a modest decline, maybe half the rate we saw in the first quarter,' said Gary Thayer, senior economist with Wells Fargo Advisors.

The GDP report reflected an economy still deep in recession when 2009 began. But a report by the Paris-based Organisation for Economic Cooperation and Development this week predicted the US downturn will bottom out this year and be followed by a soft recovery in 2010. -- REUTERS