New applications for unemployment benefits dropped to a 2-1/2-year low last week, pointing to a stronger footing for the labor market as the economic recovery gathers momentum.
The fall in claims reported by the Labor Department on Thursday partly reflected the unwinding of a weather-related spike in late January but 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, who had forecast claims slipping to 410,000, said applications need to stay below the 400,000 level for some time to signal consistent job growth.
“We had a bit of volatility due to all the harsh weather,” said Mark Vitner, a senior economist at Well Fargo Securities in Charlotte, North Carolina. “Despite all that, layoffs seem to be trending down and that should allow for job growth to pick up over the next few months.”
The data followed Friday’s report that showed only 36,000 jobs were created in January, which was blamed on severe snow storms that lashed large parts of the country. But the jobless rate in January fell to a 21-month low of 9 percent.
A Labor Department official said claims were still unwinding some of the weather effects that pushed up filings late last month. Some economists said blizzards last week in the country’s Midwest could also have been a factor.
Still, investors saw the claims report as yet more evidence that the economic growth pace was accelerating. Safe-haven U.S. government bond yields rose, while the dollar gained broadly.
A weak earnings outlook from Cisco Systems Inc pulled U.S. stocks lower and the Dow Jones industrial average was on track to snap an eight-day rally.
The economy grew at a 3.2 percent in the fourth quarter and all indications are that solid growth momentum will continue through much of this year.