updated 4/17/2008 10:53:09 AM ET 2008-04-17T14:53:09

The number of newly laid off workers filing claims for unemployment benefits increased by more than expected last week after a big decline in the previous week.

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The Labor Department said Thursday that applications for unemployment benefits rose to 372,000, an increase of 17,000 from the previous week.

The four-week average for claims was 376,000, down only slightly from 376,750, the previous week. Aside from the period in the fall of 2005 after Hurricane Katrina hit, the four-week average for claims has risen to levels last seen in 2003 when the country was mired in a long jobless recovery after the 2001 recession.

Claims have been unusually volatile in recent weeks, falling by 51,000 two weeks ago after having risen by 35,000 the week before that. Analysts said that claims have been difficult to read because of trouble the government is having adjusting the figures for seasonal changes to reflect this year’s unusually early Easter and also because of the impact of a strike at a key parts supplier for General Motors.

The unemployment rate jumped to 5.1 percent in March as businesses cut 80,000 jobs, the biggest drop in payrolls in five years. Many economists believe that was the most dramatic indication to date that the country has fallen into a recession.

Economists believe that the downturn should be short and mild, ending this summer with the help of the economic stimulus package that will send rebate checks to 130 million households. Still, they are looking for the unemployment rate to rise to 6 percent before stronger economic growth starts generating renewed hiring.

Ian Shepherdson, chief economist at High Frequency Economics, said the claims average for the past two months has now risen to a level similar to where it was at the start of the 2001 recession. He said he expected claims to keep rising in the months ahead and be above 400,000 on a weekly basis by this summer.

“We can think of no good reason why claims should now level off and plenty of reasons why they should be expected to rise further,” Shepherdson said.

In another sign of labor market weakness, the total number of people receiving unemployment benefits rose to 2.98 million for the week ending April 5, up 26,000 from the previous week and the largest amount in nearly four years.

For the week of April 5, 31 states and territories reported increases in claims while 22 states had declines.

The state with the biggest increase was Georgia, where claims rose by 4,306, reflecting higher layoffs in textile plants, carpet and rug factories and in service industries. Michigan was next with an increase of 3,483 claims applications, reflecting higher layoffs in the auto industry, followed by Texas with an increase of 2,377.

The states with the biggest declines in claims applications were New Jersey, down 2,737; New York, down 2,465; and Wisconsin, down 2,075.

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