The number of newly laid-off workers seeking unemployment benefits rose last week. It is a sign jobs remain scarce even as the economy recovers.

According to the Labor Department, first-time claims have increased by 18,000. Several economists said they had been expecting a drop in jobless claims.

"This is ... a volatile time when the numbers move around quite a bit," a department analyst said.

Jobless claims peaked during the recession at 651,000 towards the end of March 2009. Federal Reserve Chairman Ben Bernanke said Wednesday that high unemployment is one of the toughest challenges the economy faces.

While layoffs have slowed, hiring is "very weak," he said.

"We are far from being out of the woods," Bernanke said in a speech in Dallas. "Many Americans are still grappling with unemployment or foreclosure or both."

Layoffs declined to their lowest level in three years in February, based on a separate government report Tuesday. But hiring remained about 40 percent below pre-recession levels.