The number of Americans on the live register increased unexpectedly last week according to new figures that come ahead of President Barack Obama’s address to Congress where he is expected to announce a new $300m (€214m) job stimulus programme.
Applications for unemployment benefits rose to 414,000 last week – analysts had expected a drop to 405,000.
But in positive news, another report showed strong US exports and a narrower trade deficit in July.
Indices like the Dow Jones, Nasdaq and S&P fell on the jobs news but all eyes will be on President Obama’s jobs plan when it is announced later this evening.
The president is under serious pressure with polls showing his popularity sliding to new lows and voters frustrated with a 9.1pc unemployment rate.
He is expected to announce tax cuts for middle class households and businesses as well as a capital spending spree on roads and bridges.
His handling of the economic crisis has come under fire from both Republicans and fellow Democrats alike.
Republican Senator Lamar Alexander has said the President should stand up and take responsibility for a deterioration in the US economy since he took office.
"Unemployment is worse, housing is worse, the debt is worse, and he's done all that by throwing a big wet blanket over the economy with his regulatory, tax and healthcare policies," he said.