updated 1/5/2006 11:47:58 AM ET 2006-01-05T16:47:58

Claims for jobless benefits fell to the lowest level in five years last week, as the economy showed continuing resilience after last year’s devastating hurricanes. Separately, new data showed the nation’s service sector grew more rapidly in December.

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The Institute for Supply Management said Thursday its index of non-manufacturing activity increased to 59.8 last month from 58.5 in November. The new figure was above the 59 reading forecast by analysts.

Also Thursday, the government reported that first-time jobless claims fell by 35,000 last week to 291,000, the lowest level in more than five years and a sign that labor markets are shaking off the effects of Hurricanes Katrina, Rita and Wilma.

“We’re looking at the some positive expansion, solid growth in jobs and in general economic growth, and that’s something we see continuing,” said Jason Schenker, an economist at Wachovia Corp.

The two reports provide more evidence that the hurricanes took only a very limited and temporary toll on the national economy, even as they caused tremendous damage to the business climate in the Gulf states, he said.

He cautioned against putting too much emphasis on the jobless claims figure, noting it is just a weekly number that often proves highly volatile. The week measured by the figure will not be included in the widely anticipated December payrolls figure scheduled for release Friday morning.

But, taken together with generally declining readings in recent weeks, it shows the

The service sector’s growth in December marked the 33rd straight month of its expansion.

A reading of 50 and above points to a growing service sector, while a figure below that signals contraction. The index, which has averaged 60.1 over the past year, fell as low as 53.3 in September when businesses were struggling to deal with sharply higher energy prices after Hurricane Katrina.

But those concerns have diminished to some extent, even though still-high energy prices are continuing to cause increases in prices and product surcharges, said Ralph G. Kauffman, chairman of the ISM’s survey committee.

“The overall indication in December is continued economic growth in the non-manufacturing sector with a cautiously optimistic outlook as we enter 2006,” he said in a written release.

The pickup in growth reflects faster growth in new orders received by service-sector companies, and in business activity, ISM said. A measure of employment in the sector also ticked up.

Of the 17 industries tracked by the report, 11 reported increased activity in December versus 12 in November. They include entertainment, business services, retail trade, finance and banking, insurance, communication, utilities, public administration, health services, other services and transportation.

Overall, the report points to growth that is quite healthy, despite continued concerns about prices, Schenker said. He cautioned against putting too much emphasis on the jobless claims figure, noting it is just a weekly number that often proves highly volatile. The week measured by the figure will not be included in the widely anticipated December payrolls figure scheduled for release Friday morning.

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