(Updated for additional information and analyst commentary.)

NEW YORK ( TheStreet) -- The number of Americans filing new claims for unemployment benefits unexpectedly increased by 12,000 last week according to a labor department report released early Thursday.

Initial claims rose for the first time in four weeks to 465,000 in the week ended Sept. 18, from the previous week's revised figure of 453,000. Consensus expected initial claims to remain unchanged at 450,000, according to Briefing.com.

The number of people filing continuing claims -- those who have been receiving unemployment insurance for at least a week -- fell to 4.489 million for the week ended Sept. 11 , a decrease of 48,000 from the previous week's revised figure of 4.537 million. That was still higher than consensus estimates that projected a dip to 4.445 million.

The 4-week moving average in initial claims, which smoothes the volatility in week-to-week reports, was 463,250, a decrease of 3,250 from the previous week's revised average of 466,500. The 4-week moving average in continuing claims was 4.519 million, an increase of 2,500 from the preceding week's average of 4.517 million.

In recent weeks jobless claims had pointed to a stabilizing in the job market, dropping more than expected. But economists have remained skeptical of the declines, as unemployment numbers remained high.

"The 10-year average for unemployment claims is 393,000 and that included a period when we had a real estate boom. We are still about 70,000 above that average," said Michael Pento, senior economist at Euro Pacific Capital."Even though the so-called recession has ended, there is no job growth," said Pento, pointing out that even though layoffs may be slowing, companies were still not hiring.

One of two things had to happen for jobs to recover, according to Pento. The Federal Reserve would succeed in creating another bubble through its loose monetary policy that would help provide jobs in the near term. The more appropriate solution would be for the Fed to allow prices to drop. "We need to substantially rebuild our manufacturing base. We should lower taxes and regulation, allow wages and asset prices to drop so that we can finally compete with China," he said.

That might lead to a truncated depression but it might be necessary to reconcile the imbalances, according to Pento. "If you gain a lot of weight, you got to go on a diet. It is painful but your body is actually healing .... The path to prosperity cannot be painless," he said.

Stocks fell immediately after the report. The Dow Jones Industrial Average was last trading flat at 10740 on Thursday morning.

-- Written by Shanthi Venkataraman in New York

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