ÿþUPDATE 1-U.S. jobless claims rise unexpectedly last week Thursday, December 08, 2005 7:46:36 AM (GMT-06:00) Provided by: Reuters News (Adds market and economist reaction, FOMC details) By Nancy Waitz WASHINGTON, Dec 8 (Reuters) - The number of U.S. workers filing new jobless claims last week rose unexpectedly by 6,000, the government said on Thursday, but a more reliable barometer of labor trends fell for the second straight week. Initial claims for state unemployment insurance benefits climbed to a seasonally adjusted 327,000 in the week ended Dec. 3 from an upwardly revised 321,000 the previous week, the Labor Department said. A Labor Department analyst said that historically, claims tend to rise in the week following the holiday-shortened Thanksgiving week. The number of new claims was above Wall Street forecasts for 317,000 and the original reading of 320,000 for the week ended Nov. 26 but U.S. Treasuries showed little reaction to the unexpected rise. "The number was a little bit disappointing in that it was above the expected level, and it's a little bit higher than the range that we were seeing before the late summer hurricanes," said Patrick Fearon, senior economist for A.G. Edwards & Sons Inc. in St. Louis. "Nevertheless, it still should be considered a positive that initial claims are way down from the levels immediately after the storms," Fearon said. "It looks like the labor market isn't deteriorating any more, although of course a lot of the people who lost their jobs due to the storms are still out of work." The analyst said there were about 7,000 new claims last week related to hurricanes Katrina and Rita, not adjusted for seasonal factors, which brings the cumulative number of claims linked to the Gulf Coast storms to 569,000. Hurricane Wilma, which hit Florida in late October, was cited as the reason behind about 700 unadjusted claims, for a running total of 30,700. A four-week moving average of new claims, which smooths weekly volatility to provide a better picture of labor market trends, fell for the second straight week, dropping to 322,500 from 322,750 the prior week. The number of people who remained on the benefit rolls after drawing an initial week of aid fell 137,000 in the week ended Nov. 26, the latest period for which data are available. That was the largest one-week drop since the start of the year and took so-called continued claims to 2.60 million. The Federal Reserve's decision-making Federal Open Market Committee is scheduled to meet Tuesday to plot interest rate strategy. Labor conditions are one important factor the Fed policy-makers likely will take into consideration. The Fed increased interest rates in November for the 12th straight time, voting to raise the benchmark federal funds rate to 4 percent, and is expected to hike short-term rates again next week at its final policy session this year. Market interest is centered on whether the Fed statement issued after the meeting will offer any clues whether the Fed is near the end of a rate-rise cycle. ((Reporting by Nancy Waitz, editing by Andrea Hopkins; Reuters Messaging: nancy.waitz.reuters.com@reuters.net; +1 202 310-5477)) (C) Reuters 2005. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world. nN08230354 US/CLAIMS1 Retrieval ID: 165018+08-Dec-05+RTRS;1 Copyright © 2005 Reuters News © Reuters 2005. All rights reserved. Republication or redistribution of Reuters content [or maintenance releases or similar], including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.