The number of U.S. workers filing new applications for jobless benefits tumbled last week, a government report showed on Thursday, reversing a recent spike that had raised concerns about renewed labor market weakness.
Initial claims for state unemployment benefits dropped by 43,000 to a seasonally adjusted 440,000 for the week ended February 6, down from a revised 483,000 in the prior week, the Labor Department said.
Analysts polled by Reuters had expected 465,000 initial claims. The prior week was initially reported as 480,000, an unexpectedly high reading that was blamed in part on a backlog of claims that piled up over the holiday season.
U.S. stock index futures extended gains after the data, while the dollar pared losses versus the yen.
A Labor Department official said that with this latest report, the administrative backlog was largely washed out.
By and large we are resuming a normal level with all states reporting an appropriate base level, the official said.
The four-week moving average, which smooths out week-to-week volatility, fell by 1,000 to 468,500.
The good news in the claims is that the Labor Department administrators are telling us that they have gotten through a backlog and perhaps the labor market hasn't deteriorated very much in the last two months, said Cary Leahey, senior economist with Decision Economics in New York.
You can't conclude that the labor market in February will be worse than it was in January.
Investors are keeping a close eye on jobless claims for evidence that the economy is on the verge of adding jobs again. With the exception of November 2009, payrolls have declined in every month since the recession began in December 2007.
That has piled political pressure on President Barack Obama, whose popularity fell as the jobless rate rose to a 26-year high.
In an economic report released earlier on Thursday, the White House said it expects the economy to create an average of 95,000 jobs a month this year.
However, it said the unemployment rate would probably fall only slowly, and it was concerned about the large number of people out of work for a prolonged period.
The Labor Department's report showed the number of people applying for benefits after an initial week of aid fell to 4.54 million in the week ended January 30, the lowest in 13 months. That figure is somewhat skewed by the fact that many people have dropped off the rolls because they have exhausted benefits, not because they have found new jobs.
(Reporting by Emily Kaiser, Additional reporting by Ellen Freilich in New York, Editing by Andrea Ricci.)