The Labour Department reported that initial requests for jobless benefits rose to a seasonally adjusted 586,000 in the week ended Dec 20, from an upwardly revised figure of 556,000 the previous week. That's more than the 560,000 economists had expected.

That's also the highest level of claims since November 1982, though the work force has grown by about half since then.

A Labour Department analyst said auto-related layoffs were a factor in the increase.

The four-week average of initial claims, which smooths out fluctuations, increased to 558,000. That's the highest since December 1982, when the economy was emerging from a steep recession.

There was some improvement in the number of Americans continuing to seek unemployment benefits, which dropped slightly to 4.37 million from 4.39 million the previous week. Wall Street economists had expected the number to increase to 4.4 million.

Economists consider jobless claims a timely, if volatile, indicator of the health of the labor markets and broader economy. A year ago, initial claims stood at 353,000.

The elevated level of new jobless applications is just one of several signs that the labour market has deteriorated in recent months.

The Labour Department said earlier this month that employers cut a net total of 533,000 jobs in November, sending the unemployment rate to 6.7 per cent, the highest in 15 years.

Mass layoffs are taking place in a wide range of industries.

Industrial conglomerate Textron Inc. on Tuesday said it has cut 2,200 jobs, while technology services provider Unisys Corp. said on Monday it will eliminate 1,300 jobs. Sovereign Bancorp Inc.'s bank unit said last week it is laying off 1,000 employees. -- AP