US unemployment claims hit their highest level since mid-September

New York(CNN Business) America's job market recovery has hit a bump in the road.

Another 853,000 Americans filed for first-time unemployment benefits last week on a seasonally adjusted basis, the Labor Department reported Thursday. It was the largest number of claims since mid-September.

Not adjusting for seasonality, initial claims stood at nearly 950,000.

Initial jobless claims rose versus the prior week, marking the third increase in the past four weeks. Last week's decline came on the heels of the Thanksgiving holiday.

"The surge in initial claims is especially concerning when claims are still above levels near the peak of the Great Recession," said Glassdoor senior economist Daniel Zhao.

On top of regular applications for jobless benefits, 427,609 workers filed claims under the Pandemic Unemployment Assistance program, which is designed to help people such as the self-employed. It was also an increase from the prior week. This number is not adjusted for seasonality.

Together, first-time claims totaled 1.4 million last week, not adjusted for seasonal changes, also the highest level since mid-September.

The numbers don't bode well for the labor market recovery.

Continued jobless claims, which count workers who have filed for unemployment benefits for at least two weeks in a row, rose to 5.8 million with seasonal adjustments in the week ended November 28. It was the first increase in continued claims since late August.

Economists have been looking closely at continued jobless claims, as they suspected that declines might be due to workers rolling onto other programs, such as the Pandemic Emergency Unemployment Compensation program, after exhausting their state benefits.

The number of people on PEUC benefits ticked down to 4.5 million in the week ended November 21. But because the data lags behind other numbers in the report it does not yet reflect the clearly worsening conditions.

This "ugly round of data" is weighing on expectations for the December jobs report, said Mike Englund, chief economist at Action Economics, in a note to clients. This month's jobs report isn't due until early January.

"Last week's [monthly] jobs report showed a rapid deceleration in the recovery in November, and surging UI claims only add to the picture of a slowing recovery this winter," Zhao said.

The US economy added 245,000 jobs in October, fewer than economists had expected, the Bureau of Labor Statistics reported last week. The unemployment rate inched down to 6.7%.

"The worsening economic data raises the specter of a double-dip recession. Despite the prospects of widespread vaccine availability by next summer, weak economic data now puts increasing pressure on Congress to extend additional relief to bridge Americans over the next few months," Zhao added.

Meanwhile in Washington, the chances are dwindling that lawmakers will be able to forge a stimulus agreement before the next spending deadline in eight days.

Pandemic-specific benefits that were created as part of the CARES Act in the spring will expire at the end of the month, cutting off the funding for millions of Americans, including those on the PEUC and PUA programs, which had more than 13 million recipients in total in the week ended November 21.

Last week, the US Government Accountability Office said in a report that the Labor Department's data wasn't an accurate estimate of how many Americans are actually receiving benefits. States remain overloaded and local labor departments are struggling with claims backlogs.