WASHINGTON - November 4, 2010 - The number of people seeking jobless benefits jumped sharply last week, after two straight weeks of declines.

The increase undermines hopes that unemployment claims, after falling four times in the previous five weeks, were on a sustained downward trend. That would signal layoffs were slowing and hiring was picking up. Instead, claims remain stuck at an elevated level.

The Labor Department said Thursday that initial claims for unemployment aid rose by 20,000 to a seasonally adjusted 457,000 for the week ending October 30. Wall Street analysts polled by Thomson Reuters had expected a smaller rise.

Claims have fluctuated around the 450,000 level all year. They will need to drop below 425,000 to signal sustained job gains.

"Those looking for an imminent spurt of job creation are, for yet another week, likely to be disappointed," said Dan Greenhaus, chief economic strategist at Miller Tabak, in a note to clients.

The weekly applications for unemployment benefits are volatile, but are considered a real-time snapshot of the job market. They reflect the pace of layoffs and indicate whether companies are hiring.

Separately, labor productivity rebounded in the July-September quarter, rising by 1.9%, after falling in the previous quarter.

But even with the decline, productivity, or output per hour worked, is still growing at a much weaker pace than last year. That could be a positive sign that companies will have to step up hiring to meet growing demand.

Meanwhile, the four-week average of claims, a less volatile measure, rose by 2,000 to 456,000.