March 7, 2013 at 8:58 AM ET
The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting a pick-up in the labor market recovery.
Initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 340,000, declining for a second straight week, the Labor Department said on Thursday.
The prior week's claims figure was revised to show 3,000 more applications received than previously reported.
Economists polled by Reuters had expected first-time applications to rise to 355,000.
The four-week moving average for new claims, a better measure of labor market trends, also fell 7,000 to 348,750 - the lowest level since March 2008 - pointing to some firming in underlying labor market conditions.
A Labor Department analyst said no states had been estimated and there were no special factors influencing the report.
The data has no bearing on February's employment report, due on Friday, as it falls outside the survey period.
According to a Reuters survey of economists, employers probably added 160,000 jobs to their payrolls last month, a small pick-up up from January's 157,000 count. That would just be enough to hold the jobless rate steady at 7.9 percent.
Economists say job gains of at least 250,000 per month over a sustained period are needed to significantly dent the ranks of the unemployed. Job growth averaged 200,000 in the last three months.
While layoffs have subsided, companies are not in a hurry to step up hiring as domestic demand remains lackluster.
Claims remain tucked in the low end of a 330,000 to 375,000 range for this year.
High unemployment prompted the Federal Reserve last year to launch an open-ended bond buying program. The U.S. central bank said it would keep up the program until there was a substantial improvement in the outlook for the labor market.
In testimony to Congress last week, Fed Chairman Ben Bernanke signaled the central bank would press forward with plans to buy $85 billion in bonds per month.
The number of people still receiving benefits under regular state programs after an initial week of aid rose 3,000 to 3.1 million in the week ended February 23. The four-week moving average of so-called continuing claims was the lowest since July 2008.
Meanwhile, nonfarm productivity fell at its fastest pace in four years in the fourth quarter, but the decline was likely to be temporary as economic growth is expected to pick up after stalling in late 2012.
Productivity fell at a 1.9 percent annual rate, the weakest pace since the fourth quarter of 2008, the Labor Department said on Thursday. A month ago it estimated that productivity, which measures hourly output per worker, fell at a 2 percent pace.
It had increased at a 3.1 percent rate in the third quarter. Economists polled by Reuters had expected the decline productivity to be revised to a 1.6 percent rate.
The drop largely reflects a surge in hiring while output continued to expand at a slower pace. The economy added about 600,000 jobs the fourth quarter, but gross domestic product only grew at a 0.1 percent rate.
Growth is expected to accelerate in the first quarter, although the pace is not expected to be above 2 percent as the economy adjusts to tighter fiscal policy.
Unit labor costs - a gauge of the labor-related cost for any given unit of output - rose at a 4.6 percent rate in the fourth quarter rather than 4.5 percent, the report showed.
Labor costs were up only 2.1 percent from a year-ago, underscoring the lack of wage-related inflation pressures in the economy and helping to keep the door open to further monetary easing by the Federal Reserve to stimulate the economy.
Copyright 2013 Thomson Reuters.