Nearly 900,000 workers applied for jobless benefits last week, extending recent increases in another sign the economy is entering a winter slowdown.

Unemployment claims rose to 885,000 from 862,000 a week earlier, the Labor Department said Thursday.

More broadly, claims are down sharply from a peak of nearly 7 million in March, but the four-week moving average, which smooths out weekly volatility, recently increased after trending downward since the spring. The weekly figures can be volatile around the holidays due to seasonal-adjustment issues.

“The next few months will be pretty rough for the labor market as you do see businesses having to contend with this latest wave of Covid cases,” Sarah House, senior economist at Wells Fargo Securities, said. “You are seeing those government restrictions coming into play again.”

Ms. House, and many other economists, project the labor market will cool until vaccines are widely distributed. More than 90{960021229dc1dc07dce4932a9ddab0b26243ff9ca1f758a9c1fcae84a7a57436} of economists in a recent Wall Street Journal survey said they expect the rollout of coronavirus vaccines will cause hiring to accelerate in the second quarter of next year.

Economic data broadly point to a slowdown. Retail sales dropped 1.1{960021229dc1dc07dce4932a9ddab0b26243ff9ca1f758a9c1fcae84a7a57436} in November from a month earlier, according to a Commerce Department report Wednesday. Overall consumer spending, which includes retail and services consumption, has continued to increase, but more slowly than over the summer.

Job growth cooled in November as many Americans gave up looking for work. Robust job gains in the late spring and early summer largely reflected businesses adding back staff after lockdowns were lifted. But the recovery is far from complete, and many businesses continue to operate below capacity. Some state and local governments implemented new restrictions as coronavirus cases surged this fall.

Continuing claims, a proxy for the number of people collecting unemployment benefits through regular state programs, rose to 5.8 million in the week ended Nov. 28, from 5.5 million a week earlier, on a seasonally adjusted basis, according to the Labor Department. Continuing claims declined throughout the summer and into the fall, a sign many laid-off workers returned to jobs.

Many individuals, though, are experiencing long spells of unemployment. About 4.5 million people who had exhausted state benefits were receiving aid through a federal extended-benefits program in the week ended Nov. 21. Others had run through benefits altogether, as job opportunities are limited in industries hit hard by the virus.

Andrew Poulton, 63 years old, of Palm Springs, Calif., was recruiting guest lecturers to speak on luxury cruise ships before the pandemic hit and shut down cruise operations. Mr. Poulton has been unemployed since April, and even though he has 40 years of experience in marketing and management, he said he is struggling to find a new job.

“Between the pandemic and my age nobody is really, I’m sure, giving my résumé more than a cursory glance at this point,” Mr. Poulton said. Mr. Poulton is relying on unemployment payments of $275 a week as his sole source of income. He hopes to land employment soon to “stop the hemorrhaging” of his savings.

The U.S. unemployment rate shot up faster than in any other developed country during the pandemic. WSJ explains how differences in government aid and labor-market structures can help predict how and where jobs might recover. Video/Illustration: Jaden Urbi/WSJ

Both the extended-benefits program and a program that provides benefits to those not typically eligible for jobless aid—such as independent contractors and self-employed individuals—will expire at the end of this year.

On Wednesday, congressional leaders were closing in on a coronavirus relief bill that was expected to include enhanced unemployment benefits of $300 a week. But congressional aides noted negotiations were continuing and no final agreement had been struck.

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