The total also was much higher than analysts expected. Wall Street economists surveyed by Thomson Reuters expected claims to increase only slightly to 484,000. Initial claims from two weeks ago were revised upward Thursday by 3,000 to 484,000.
The increase puts jobless claims at levels similar to the recession of the early 1990s. The four-week average of claims, which smooths out fluctuations, increased to 491,000, the highest in more than 17 years.
Jobless claims above 400,000 are considered a sign of recession. A year ago, claims stood at 338,000.
The number of individuals continuing to seek unemployment benefits rose to 3.9 million, above analysts' estimates of 3.85 million. That's the highest total since January 1983, though the labor market has grown by about half since then. The continuing claims tally is for the week ending Nov. 1, one week behind the initial claims report.
Recipients stop receiving benefits when they find another job or their benefits run out. The increase in continuing claims indicates that laid-off workers are taking longer to find a new job.
Economists consider jobless claims a timely, if volatile, indication of how rapidly companies are laying off workers. Employees who quit or are fired for cause are not eligible for benefits.
Thursday's report likely "reflects a genuine acceleration in the pace of layoffs," Ian Shepherdson, chief U.S. economist for consulting firm High Frequency Economics, wrote in a note to clients.
The report could also affect the political debate in Congress over whether to enact another economic stimulus package and what it should include. Democrats want to add an extension of unemployment benefits, which last 26 weeks.
Initial claims have been driven higher in the past several months by a slowing economy hit by the financial crisis, and cutbacks in consumer and business spending. Claims also rose in late September due to the impact of Hurricanes Ike and Gustav, but the department said last week that the impact of the hurricanes has passed.
The rise in claims has been mirrored by an increase in the unemployment rate. Unemployment reached a 14-year high of 6.5 percent in October, the Labor Department said last week, as the ranks of the unemployed swelled to 10.1 million.
Several companies recently have announced mass layoffs, including Morgan Stanley, General Motors Corp., Ford Motor Co., and Fidelity Investments.