Feb., 22 /WASHINGTON --The number of U.S. workers filing first-time applications for unemployment benefits surged to a seven-week high last week, suggesting the ailing labor market relapsed after several weeks of improvement.

Initial jobless claims rose by a larger-than-expected 21,000 to 402,000 in the week that ended Feb. 15, the Labor Department said Thursday. The increase was the first in three weeks and it raised the total above the 400,000 mark that economists say correlates with a rising unemployment rate. The four-week moving average, which smoothes out weekly fluctuations, rose by 4,750 to 394,750.

Wall Street expected a smaller increase. A consensus forecast of economists surveyed by Dow Jones Newswires and CNBC had called for a gain of just 6,000 claims. A Labor Department spokesman said the numbers should be regarded with caution because states had less time to report them because of the Presidents' Day holiday and the snowstorm along the East Coast over the weekend.

About 2 million Americans have lost their jobs since the economy slipped into a recession in 2001. The economy grew just 0.7% in the last three months of 2002, but it had recently started to show signs of improvement. The unemployment rate fell three tenths of a percentage point to 5.7% in January as employers added 143,000 jobs.

The Labor Department's latest jobless-claims data indicated weakness on several fronts. The number of workers drawing unemployment benefits for more than a week increased for the first time in a month in the week that ended Feb. 8, the latest period for which the number is available. Continuing claims rose by 147,000 to 3,444,000 in that week. The unemployment rate for workers with unemployment insurance held rose a tenth of a percentage point to 2.7%

In all, 24 states and territories reported a increase in unadjusted initial claims for the week of Feb. 8, the latest week for which detailed state information is available. Twenty-nine reported a decrease.

Texas reported the biggest increase, a gain of 3,940 claims that it attributed to layoffs in the information, mining and manufacturing industries. North Carolina reported the biggest decrease, saying claims declined by 5,836 because of fewer layoffs in the construction and furniture industries.

The Labor Department revised its preliminary estimate of initial claims for the week of Feb. 8, raising it by 4,000 to 381,000. The department routinely revises its initial estimates.