The number of US workers filing first-time unemployment claims increased to 898,000 last week from 53,000 the previous week, according to data released Thursday by the Labor Department.
Analysts expected 825,000 for the week ending Oct. 10, while the previous week's number was revised up 5,000 from 840,000 to 845,000.
The states of Illinois, Indiana and Massachusetts saw the highest increase. Alabama and Michigan posted major declines.
The world's largest economy continues to have a slow recovery from the coronavirus pandemic since roughly half of the 22 million jobs lost in March and April have been filled.
The unemployment rate fell to 7.9% in September after the economy added 661,000 jobs last month, but the number of unemployed workers fell only by 1 million, leaving 12.6 million workers without a job.
The dismal figures highlight the immediate need for cash for many Americans amid the economic slowdown caused by COVID-19, as a much-anticipated stimulus package by Congress has hit a wall in Washington.
US Treasury Secretary Steven Mnuchin said Wednesday it will be difficult to pass a bipartisan deal on a relief bill before the Nov. 3 presidential election.
Mnuchin is expected to hold another round of talks Thursday with House of Representatives Speaker Nancy Pelosi who insists on a $2.2 trillion bill despite the Republicans raising their offer from $1.6 trillion to $1.8 trillion.
"Nancy Pelosi couldn’t care less about the American People or the great American Worker," US President Donald Trump wrote late Wednesday on Twitter
"She should approve needed STIMULUS now. Most other Dems agree. Republicans are ready to go, I am ready to sign!!!" he added.
Pelosi responded: "We want to have an agreement. Yet Republicans refuse to ensure that such an agreement puts families first."
With talks stalled, the Dow Jones, S&P 500 and Nasdaq were each down by more than 1.1% before markets opened Thursday.
Morgan Stanley shares were also down 1% in pre-market hours despite strong financial results in the third quarter.
The investment banking and financial services firm saw earnings rise 22.7% to $2.7 billion in the July-September period, from $2.2 billion the same period last year. Revenue rose 16% to $11.6 billion, from $10 billion.Anadolu Agency website contains only a portion of the news stories offered to subscribers in the AA News Broadcasting System (HAS), and in summarized form. Please contact us for subscription options.