The number of Americans claiming new unemployment benefits dropped to a four-year low last week, bolstering hopes a recent pick-up in job growth will prove lasting.
Initial claims for state jobless benefits fell 5,000 to a seasonally adjusted 348,000, the lowest level since February 2008, the Labor Department said on Thursday. Economists polled by Reuters had forecast claims rising to 354,000 last week.
A separate report showed a gauge aimed at predicting future U.S. economic activity rose sharply in February, pointing to strengthening growth. The data suggests a firming of U.S. economic activity even as China slows and the euro zone slumps.
"Although there is some indigestion, courtesy of China and continued economic and financial market challenges in Europe, domestically things here still support moderate economic growth," said Michael Strauss, chief economist at Commonfund in Wilton, Connecticut.
A four-week moving average of new claims, a better measure of trends, declined 1,250 to 355,000. The data covered the survey week for the government's report on March employment. New claims dropped 5,000 between the February and March survey periods, suggesting another month of solid job growth.
Employers added 227,000 jobs to their payrolls in February, taking the tally for the past three months to 734,000. While the unemployment rate held at 8.3 percent, it has come down 0.8 percentage point since August.
The data on Thursday had little impact on U.S. financial markets as investors worried about the global economy. Other reports showed Chinese manufacturing contracted for a fifth straight month in March, while factory activity in France and Germany declined sharply.
BETTER FORTUNES FOR U.S.
In contrast, U.S. manufacturing activity continues to expand, thanks to stepped-up motor vehicle production, which has led factories to add more workers and extra shifts.
And even the housing market, a major source of pain for the economy, is improving. Home prices as measured by the Federal Housing Finance Agency were down 0.8 percent in January from a year-ago. In contrast, prices in January 2011 had been 4.6 percent lower than the year-earlier month.
Other data this week showed sales of previously owned homes at their second-highest level since May 2010 in February, and permits for homebuilding approaching a 3-1/2 year high.
Firming labor market conditions helped lift the Conference Board's Leading Economic Index 0.7 percent last month. Economists say while unseasonably mild weather has helped underpin the economy, a true labor market recovery was under way.
"There is more going on here than merely the benefits of a mild winter. We believe that stronger job creation will be sustained throughout 2012," said John Ryding, chief economist at RDQ Economics in New York.
The claims report showed the number of people receiving benefits under regular state programs in the week ended March 10 after an initial week of aid fell to its lowest level since August 2008.
Despite the improving picture, long-term unemployment remains a major problem. About 43 percent of the 12.8 million out of work Americans in February had been jobless for more than six months.
A total of 7.28 million people were claiming unemployment benefits under all programs during the week ended March 3, the latest week for which data is available. That was down 142,499 from the prior week.