New applications for jobless aid fell unexpectedly last week, dropping by 13,000, but a more reliable moving average of these claims rose to the highest level in six months, government data on Thursday showed.

It was the third straight week in which initial claims for state unemployment insurance benefits fell and the drop took claims to 317,000 from a revised 330,000 the prior week. That was the lowest level since October 6 when they were 309,000, the Labor Department said.

Wall Street economists were expecting a slight increase in claims to 330,000 from the originally reported 327,000 claims for the week ended October 27.

There's more skittishness in the labor market against the backdrop of generally good economic activity, said Richard DeKaser, chief economist for National City Corp. in Cleveland. It's still consistent with a moderate expansion of the labor base.

Prices for U.S. government debt extended losses while U.S. stock index futures held ground after the surprise drop in new jobless claims,

Of the total number of new claims in the latest reporting week, slightly less than 3,000 were related to the California wildfires, a Labor Department spokesman said.

The four-week moving average of new claims, considered a better gauge of labor market trends because it irons out weekly gyrations edged up to 329,750 from 327,750. That was the highest level hit since April 21.

When averaged over four weeks, we've seen a moderate uptick in layoff activity, DeKaser said. That's consistent with the economic slowing from the third quarter.

The number of people already receiving jobless benefits who remained on state benefit rolls inched down by 4,000 to 2.579 million in the week ended October 27, the latest period for which figures were available.

Economists polled by Reuters forecast these continued claims to fall to 2.57 million from the original reading of 2.588 million in the prior week

California Unemployment