Labor market gets slightly strongers as economic recovery gathers momentum.
WASHINGTON (Reuters) - New U.S. claims for jobless benefits dropped to a 2-1/2-year low last week, pointing to a firming undertone in the labor market as the economic recovery gathers momentum.
Although the decline reported by the Labor Department on Thursday partially reflected the unwinding of a weather-related spike in late January, analysts said it was consistent with other indicators suggesting a strengthening labor market.
Initial claims for state unemployment benefits fell 36,000 to a seasonally adjusted 383,000, the lowest since early July 2008, the Labor Department said.
Economists had forecast claims slipping to 410,000.
"Anecdotally, we do hear that there is some improvement on the jobs front and this is another indication of that," said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York.
The data came on the heels of Friday's report showing the economy created a paltry 36,000 jobs in January, largely blamed on severe snow storms that slammed large parts of the country.
Investors saw the claims report as yet more evidence that the economic growth pace was accelerating. Prices for safe-haven U.S. government bonds fell, while the dollar rose broadly. Stocks on Wall Street fell amid disappointing corporate earnings.
A separate report from the Commerce Department showed wholesale inventories rose 1 percent to $430.5 billion, the highest since January 2009. The gain was greater than the 0.7 percent increase forecast by economists.
Last week's fall in initial claims took them below the 400,000 mark and economists say sustained declines would signal strong job growth. A Labor Department official said claims were still unwinding some of the weather effects that pushed up applications last month.
The four-week moving average of unemployment claims -- a better measure of underlying trends - dropped 16,000 to 415,500 last week.
"This report represents clear evidence that the underlying downward trend in claims remains in place," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.
"It is just not possible for claims to fall this far and not see some beneficial effect in payrolls. After the weather-affected January report, we think February payrolls will rise by about 250,000."
The number of people still receiving benefits under regular state programs after an initial week of aid declined 47,000 to 3.89 million in the week ended January 29 from an upwardly revised 3.94 million the prior week.
Economists had expected so-called continuing claims to fall to 3.90 million from a previously reported 3.93 million.
The number of people on emergency unemployment benefits increased 100,366 to 3.76 million in the week ended January 22, the latest week for which data is available. A total of 9.4 million people were claiming unemployment benefits during that period under all programs.
Image: Reuters/Robert Galbraith