WASHINGTON – New claims for jobless benefits increased by more than expected last week as companies cut jobs due to the slow economy, the Labor Department said Thursday.

The department said new applications for unemployment benefits rose 15,000 to a seasonally adjusted 478,000, slightly above analysts' estimates of 470,000.

The four-week average, which smooths out fluctuations, dropped slightly from a seven-year high to 480,250.

The total indicates that labor markets remain weak as companies lay off workers and cut back on hiring. Jobless claims above 400,000 are considered a sign of recession. A year ago, claims stood at 333,000, the department said.

Many economists expect the U.S. economy to decline this quarter and next, meeting one classic definition of a recession.

In one sign of improvement, the number of people continuing to claim unemployment insurance dropped by 6,000 to a seasonally adjusted 3.72 million, down from 3.73 million, a five-year high.

Three weeks ago, new benefit applications reached 499,000, the highest level in seven years and the second-highest since 1992.

Claims were also higher last week because of the impact of Hurricane Ike in Texas, the department said, which added about 12,000 requests for unemployment benefits, the same as the previous week.

Higher unemployment may worsen the economic downturn, as consumers — fearful for their jobs — cut back on spending. Consumer spending accounts for about 70 percent of the economy.

Federal Reserve Chairman Ben Bernanke said Monday the economy is "likely to be weak for several quarters ... with some risk of a protracted slowdown."

Several companies have announced mass layoffs this week.

Chrysler LLC said Thursday that it would eliminate 1,825 jobs by cutting a shift at a Toledo, Ohio Jeep plant and accelerating the closure of a sport utility vehicle factory in Newark, Del.

Drugmaker Merck & Co. said Wednesday that it will cut 7,200 jobs as part of a restructuring, after its third-quarter profit dropped 28 percent.

And Yahoo Inc. said Tuesday that it plans to cut 10 percent of its employees, or 1,500 people, in the next two months.

Financial services firm National City Corp. also said Tuesday that it would cut 4,000 jobs.