April 17 (Bloomberg) -- More Americans filed first-time jobless claims last week and the total number receiving benefits rose to the highest level in almost four years, a sign the labor market continues to weaken.

Initial applications for unemployment insurance increased by 17,000 to 372,000 in the week that ended April 12, the Labor Department said today in Washington. The number of people on benefit rolls climbed to 2.98 million, the most since June 2004.

Housing-related businesses are paring workers while others are reluctant to hire as evidence builds that the U.S. is in a recession. Consumer spending, which accounts for two-thirds of the economy, may keep slowing as rising joblessness hurts Americans already burdened by lower home prices and higher fuel costs.

``We'll definitely continue to see job losses,'' said Ellen Zentner, an economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ``The labor market remains weak. Consumer spending is slower and will remain slow.''

Treasuries were little changed after the report, with yields on 10-year notes at 3.69 percent at 9:34 a.m. in New York, the same as late yesterday.

Initial jobless claims were forecast to increase to 375,000 from 357,000 initially reported for the prior week, according to the median projection of 37 economists in a Bloomberg News survey. Estimates ranged from 340,000 to 395,000.

The four-week moving average, a less volatile measure, fell to 376,000 from 376,750.

Total Benefits

Total benefit rolls increased from 2.96 million the prior week. The unemployment rate among people eligible for benefits, which tends to track the U.S. jobless rate, was unchanged at 2.2 percent. These data are reported with a one-week lag.

Thirty-one states and territories reported an increase in new claims, while 22 reported a decrease, the report said.

Today's claims numbers may get more scrutiny from economists and forecasters because they correspond to the survey week for the April payrolls report, due from the Labor Department on May 2. The economy lost jobs for the third consecutive month in March.

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

Investors are betting the Federal Reserve will reduce its benchmark rate again this month after cutting it 3 percentage points since September, to 2.25 percent.

`Anemic' Housing

Economic growth slowed in nine of its 12 districts since February, hurt by ``anemic'' real estate markets and a slowdown in consumer spending, the Fed said yesterday in its regional business survey, known as the Beige Book.

``Labor markets were mostly described as weakening since the last report, though a few Districts reported ongoing shortages of skilled workers and some districts noted wage pressures,'' the report said.

Travelers Cos., the second-largest U.S. commercial insurer, this week said it cut 325 jobs to consolidate operations. The company will eliminate positions in New Jersey, Massachusetts, New York and Houston, and the firings are in the business that covers individuals' homes and cars.

Some of the gains in claims over the last few weeks may reflect a strike at an auto parts manufacturer. Workers at American Axle & Manufacturing Holdings Inc., the Detroit-based supplier seeking to cut worker pay by more than half, have been on strike since Feb. 26.

General Motors Corp., the supplier's former parent and biggest customer, has shut or partially stopped production at 30 plants because of parts shortages caused by the walkout.

Claims in Michigan, the home to both companies, rose by 3,483 in the week ended April 5, reflecting an increase in firings at automobile plants, the Labor Department's report showed.

To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net

Last Updated: April 17, 2008 09:35 EDT