The number of U.S. workers filing new claims for jobless benefits rose by an unexpectedly steep 32,000 last week to 516,000, the highest level since the weeks following the September 11, 2001 attacks, the Labour Department said.

U.S. imports fell by a record 5.6 percent in September and exports suffered their steepest drop since September 2001, narrowing the monthly trade deficit slightly more than expected, a U.S. Commerce Department report showed on Thursday.

Meanwhile, the U.S. trade deficit narrowed sharply in September as the wilting economy sent purchases of foreign oil, cars, and other goods made overseas tumbling.

In addition, the number of workers still on the benefit rolls after drawing an initial week of aid hit 3.9 million in the week to November 1, the highest since January 1983.

“This is obviously (a) very, very serious deterioration in the labour market, more than a lot of people had expected even a couple of months ago,” said Scott Brown, chief economist with Raymond James & Associates in St. Petersburg, Fla.

U.S. imports from China hit a record $33.1 billion in September, but imports from the European Union fell 3.8 percent and imports from the Organisation of Petroleum Exporting Countries slumped 27.1 percent as imported oil fell by a record $12.41 per barrel in September.

A separate report showed consumer spending continues to drop. U.S. retail sales fell for a second straight month, dipping 1.5 percent in October, according SpendingPulse data, which excludes auto sales.

“Trade balance came in much in line with expectations and marginally better than the previous month. The U.S. dollar is strengthening against the euro and sterling marginally immediately after the release. However, given the undercurrents driving the currency market at the moment, the impact is likely to be fleeting. Jobless claims are definitely elevated, the highest data print of this economic downturn and definitely a negative. That brings us very close to the peak initial jobless claims data from the previous 2000 to 2001 downturn.”

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