First-time applications for unemployment benefits rose sharply last week to the highest level in four months despite a large drop the previous week.
The number of those applying jumped 46,000 to a seasonally adjusted 388,000, up from the revised 342,000 the previous week, with both reports showing large shifts because of technical issues in California, the Labor Department reported on Thursday.
The four-week moving average, a better gauge of the labor market's direction, ticked up slightly to 365,500, an increase of 750 as layoffs remain stable while hiring chugs slowly along.
Last month, employers added 114,000 jobs and the unemployment rate dipped below 8 percent for the first time in President Obama's tenure.
The next report is due out Nov. 2, only four days before the election.
The economy is the central theme in the race for the White House, with Obama criticizing GOP nominee Mitt Romney for policies he says are a return to the past and put the nation into a deep financial hole.
Meanwhile, Romney is arguing that his broad-based tax cuts, among other ideas, will help create 12 million jobs over the next four years.
Some economists argue that regardless of who is elected, the economy is likely to spring back in the next administration behind a more robust housing market recovery and expansion in the manufacturing sector.
As the presidential candidates spar over the economy, there are reports indicating that the recovery is accelerating with retail sales up 1.1 percent, home-builder confidence hitting a six-year high this week and, along with that, the fastest pace of single-family and apartment construction in four years.
Still, concern is lingering about the fiscal cliff, a mix of spending and tax policies that could change at year's end. Businesses are pressing Congress to move quickly after the election to decide if taxes will increase and where spending will be cut. They argue that hiring will remain slow until an agreement is in place.
The government's report showed that the number of people claiming benefits in all programs for the week ending Sept. 29 was slightly more than 5 million, a decrease of 42,664 from the previous week. There were 6.7 million people claiming benefits a year ago.
Also, the number of people continuing to receive jobless benefits fell by 29,000 in the week ended Oct. 6, to 3.25 million. That figure does not include those who are receiving federal extended benefits.