US jobless claims point to healing in labor market

Other reports on Thursday showed many top U.S. retailers had strong sales in January even as customers were hit with higher taxes, while productivity at businesses slumped in the fourth quarter.

Initial claims for state unemployment benefits dropped by 5,000 to a seasonally adjusted 366,000, the Labor Department said. That was enough to pull down a four-week moving average of new claims, a gauge of the trend in layoffs, by 2,250 to 350,500, its lowest since March 2008.

“The labor market is improving, but certainly not at a robust rate by any means,” said Russell Price, an economist at Ameriprise Financial in Troy, Michigan.

While employers have pulled back on layoffs, they have only added jobs at a lackluster pace. Economists say the tepid labor market recovery means the Federal Reserve is likely to keep buying bonds into next year to keep U.S. borrowing costs low.

In a sign of the difficulty many people have in finding a job, the number of people still receiving benefits under regular state programs after an initial week of aid increased 8,000 to 3.22 million in the week ended Jan. 26.

The data came as little surprise to U.S. financial markets, which focused on events in Europe. U.S. stock prices and yields on U.S. government debt fell on worries about the economic outlook in Europe, which were fanned by European Central Bank President Mario Draghi's comments that policymakers are monitoring the economic impact of a stronger euro.

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