Nov. 6 (Bloomberg) -- The number of Americans receiving unemployment benefits surged to the highest level since 1983, foreshadowing a jump in the unemployment rate when the Labor Department issues its October jobs report tomorrow.

A total of 3.843 million workers got unemployment-insurance checks in the week ended Oct. 25, up 122,000 from the prior week, the Labor Department said today in Washington. A separate report showed worker productivity slowed last quarter as the economy contracted.

``This recession will be substantially deeper than the last two,'' said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. ``The underlying trend in claims is rising, and we'll see confirmation tomorrow that the job market is deteriorating rapidly.''

The economy probably lost another 200,000 jobs last month and the unemployment rate climbed to a five-year high of 6.3 percent, economists project tomorrow's report will show. That may spur government efforts to approve a second fiscal stimulus this year, including an extension of benefits to help ease the hit to consumer spending.

Stocks slid for a second day after Cisco Systems Inc. forecast the first revenue decline in five years and News Corp. cut its profit outlook. The Standard & Poor's 500 Stock Index fell 5 percent to close at 904.88. More than $27 trillion has been erased from the value of global equity markets as credit losses and writedowns climbed.

Worst Since 1980s

Purchasing-manager surveys this week showed contractions in both manufacturing and services industries worsened in October. The Institute of Supply Management's factory index fell the most in 26 years, while its non-manufacturing measure dropped to the lowest level since records began in 1997.

There were 481,000 first-time applications for jobless benefits last week compared with 485,000 a week earlier, today's report from Labor showed. Economists had anticipated a reading of 477,000, based on the median of 39 projections in a Bloomberg News survey. The prior week's claims were revised up from an initially estimated 479,000.

The hurricanes that hit the Gulf Coast earlier this year are no longer having a ``significant'' influence on claims, a Labor spokesman said.

Separately, the Labor Department reported that productivity, a measure of employee output per hour, rose at a 1.1 percent annual rate, more than forecast. Labor costs climbed at a 3.6 percent pace, also more than anticipated.

The four-week moving average of initial claims, a less volatile measure, was unchanged at 477,000. So far this year, weekly claims have averaged 398,000, compared with an average 321,000 for all of 2007.

Five-Year High

The unemployment rate among people eligible for benefits, which tends to track the jobless rate, increased to 2.9 percent, the highest level since 2003. These data are reported with a one-week lag.

Forty states and territories reported an increase in new claims, while 13 reported a decrease.

Initial jobless claims reflect weekly firings and tend to rise as job growth -- measured by the monthly non-farm payrolls report -- slows.

Companies are trimming staff to offset a slowdown in consumer spending. GlaxoSmithKline Plc, Europe's largest drugmaker, said yesterday it will eliminate 1,000 sales positions in the U.S. to cut costs.

The company said revenue in the U.S. last quarter dropped 13 percent.

Consumer spending declined at a 3.1 percent annual pace during the third quarter, the first decrease since 1991 and the biggest since 1980, the Commerce Department said Oct. 30.

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

Last Updated: November 6, 2008 16:49 EST