By CHRISTOPHER S. RUGABER
WASHINGTON -- More Americans sought unemployment aid last week, suggesting hiring remains sluggish.
The Labor Department said Thursday that weekly unemployment benefit applications rose 6,000 to a seasonally adjusted 386,000. The increase came after the government revised the previous week up to 380,000.
The four-week average, a less volatile measure, rose for the third straight week to 382,000. That's the highest in six weeks.
Weekly applications are a measure of the pace of layoffs. When they drop below 375,000, it typically suggests hiring is strong enough to reduce the unemployment rate.
"The trend in jobless claims suggests ... that the underlying pace of employment growth has softened," said Bricklin Dwyer, an economist at BNP Paribas.
Applications fell steadily during the fall and winter but have since leveled off.
At the same time, hiring has slowed, raising concerns about the pace of the recovery. Employers added an average of only 96,000 jobs per month in the past three months. That's down from an average of 252,000 in the previous three months.
Weaker hiring also pushed up the unemployment rate in May to 8.2%, its first rise in nearly a year.
Joseph LaVorgna, an economist at Deutsche Bank, said the increase in applications was "slightly disconcerting" but added that more data would be needed to establish a trend. Still, he forecasts that the economy will gain only 75,000 jobs this month.
Faster job creation is crucial in order to accelerate growth. More jobs mean more income for consumers, which may lead to higher spending. Consumer spending fuels about 70% of the economy.
The number of people continuing to receive benefits fell sharply, partly because extended benefit programs are ending in many states.
The total benefit rolls fell to 5.8 million in the week ending May 26, the latest data available. That's a drop of 146,000 from the previous week.
Many economists blame the slowdown in hiring partly on the unusually warm winter. Companies moved up some hiring in January and February that normally would have occurred in spring. As that trend fades, job gains might recover in the coming months.
Federal Reserve Chairman Ben Bernanke said last week that the warm winter might be a reason for the slowdown in hiring. He also suggested that the burst of job gains earlier this year could have represented a "catch-up in hiring' by employers who cut too deeply in the recession.
In that case, stronger economic growth would be needed to boost hiring further, Bernanke said.
For now, the economy appears to be sputtering. It expanded 1.9% in the first quarter, down from 3% in the October-December quarter. Growth isn't expected to improve much in the current April-June quarter.
Consumers remain cautious. Retail sales fell 0.2% in May, the Commerce Department said Wednesday, matching April's decline. It was the first back-to-back drop in two years.
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<span class="byline">By <span class="author vcard"> <span class="fn"> <a href="http://www.dailyfinance.com/tag/@motleyfool/"> Rich Smith, The Motley Fool </a> </span> </span></span></p>
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With a national debt still hovering around 120% of its GDP, Greece is still far from being out of the fiscal woods. As austerity measures bite, Greece's GDP will shrink further and its debt-to-GDP ratio will rise, putting it on course for further defaults -- er, "restructurings." Nor is Greece alone. According to official figures, debt-to-GDP ratios elsewhere are similarly high.</p>
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Photo: Gerasimos, an 83-year-old Greek man, picks through a heap of rubbish to salvage useful items as the marble gate of the Roman Agora is reflected in a mirror, in the Plaka district of Athens on Monday, March 12, 2012. Greece implemented the biggest debt writedown in history on Monday, swapping the bulk of its privately-held bonds with new ones worth less than half their original value. (AP Photo/Petros Giannakouris)</p>
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Debt-to-GDP ratio: 130%</p>
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Photo: President of Iceland Ólafur Ragnar Grímsson prior to voting in a referendum in Reykjavik, Iceland, Saturday, March 6, 2010. Icelanders voted "no" in a nationwide referendum on approving the use of $5.3 billion of taxpayers' money to repay international debts. The "no" vote may complicate Iceland's effort to recover from a deep recession and a banking collapse. (AP Photo/Brynjar Gauti)</p>
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Debt-to-GDP ratio: 120%</p>
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Photo: A man reads a newspaper in Milan, Italy, Monday, Jan. 30, 2012. European leaders are trying to come up with ways to boost economic growth and jobs, which are being squeezed by their own governments' steep budget cuts across the continent. The 27 EU leaders meeting in Brussels are also looking for common ground on a new treaty to toughen spending rules to dig the continent out of a crippling debt crisis. (AP Photo/Luca Bruno)</p>
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Debt-to-GDP ratio: 110%</p>
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Photo: Workers seen at the Luis Onofreâ luxury shoe factory in Oliveira de Azemeis, Portugal, Friday, Feb. 24, 2012. Debt burdens are rising fastest in European countries that have enacted the most draconian austerity programs. Portugal's unemployment rate hit a record 14 percent at the end of last year and the government imposed austerity measures to slash costs: Portugal cut pensions, reduced public servants' wages and raised taxes starting in 2010. (AP Photo/Paulo Duarte)</p>
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Debt-to-GDP ratio: 105%</p>
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Photo: People walk past a beggar on a bridge in Dublin Monday Feb. 20, 2012. Bank of Ireland, the only one of Ireland's six banks to avoid nationalization, reported it returned to net profit in 2011 thanks to heavy debt restructuring in the face of continued losses from dud loans. (AP Photo/Shawn Pogatchnik)</p>
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Debt-to-GDP ratio: 102%</p>
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Photo: The shadow of Republican presidential candidate, former Massachusetts Gov. Mitt Romney, is seen on a representation of the National Debt Clock as he spoke at a town hall meeting in Kalamazoo, Mich., Friday, Feb. 24, 2012. (AP Photo/Gerald Herbert)</p>
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Debt-to-GDP ratio: 85% each</p>
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Photo: Reflected in a window, people walk in London's City financial district, Tuesday, Feb. 14, 2012. Britain's AAA credit rating was put on a "negative outlook" by ratings agency Moody's, amid fears over weaker growth prospects and potential shocks from the eurozone crisis. Britain's Chancellor George Osborne said the assessment was a vindication of the Government's tough austerity measures and "a reality check for anyone who thinks Britain can duck confronting its debts". Moody's downgraded the ratings of six countries and also put France and Austria on the same caution as the UK amid violent protests in Greece. (AP Photo/Lefteris Pitarakis)</p>
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Debt-to-GDP ratio: 82%</p>
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It makes you wonder: Who will be next in line to default? And when they do, will we call that "good news," too?</p>
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Photo: A pedestrian looks at a sign in a shop reading: ''One euro, price haircut'' in Athens on Thursday, March 8, 2012. (AP Photo/Thanassis Stavrakis)</p>
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A big reason for the decline was falling prices at the gas pump, which reduced gas station sales. The average price for a gallon of gas was $3.54 Wednesday, according to AAA. That's 40 cents cheaper than the peak in early April.
That drop should free up more cash for consumers to spend in the coming months, which could accelerate spending this summer, economists said.
The economy is still struggling three years after the recession officially ended in June 2009. Wages haven't kept up with inflation. State and local governments have continued to shed jobs.
The United States has regained less than 3.8 million, or 43%, of the 8.8 million jobs lost during and immediately after the recession.
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