The number of Americans filing new claims for unemployment benefits tumbled to a five-year low last week, a hopeful sign for the sluggish labor market.
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Initial claims for state unemployment benefits fell 37,000 to a seasonally adjusted 335,000, the lowest level since January 2008, the Labor Department said on Thursday. It was the largest weekly drop since February 2010.
The prior week's claims figure was revised to show 1,000 more applications than previously reported.
While last week's decline ended four straight weeks of increases, it is probably not the start of a new trend or a sign of a material shift in labor market conditions as claims tend to be very volatile around this time of the year.
This is because of large swings in the model used by the department to iron out seasonal fluctuations.
A Labor Department analyst said the model had expected a large increase in claims last week, but the actual number of filings only showed a modest increase, leading to a big decline in the seasonally adjusted figure.
He said there was nothing unusual in the state level data and that no states had been estimated.
The four-week moving average for new claims, a better measure of labor market trends, fell 6,750 to 359,250, suggesting some improvement in underlying labor market conditions.
The claims data covered the survey week for January's nonfarm payrolls. Job growth has been gradual, with employers adding 155,000 new positions in December. The unemployment rate held steady at 7.8 percent last month.
Job gains averaged 153,000 jobs per month in 2012, little changed from 2011. The sluggish labor market and subdued inflation pressures are likely to keep the Federal Reserve on its ultra easy monetary policy course.
The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid increased 87,000 to 3.21 million in the week ended Jan. 5.
The four-week average of the so-called continuing claims was the lowest since July 2008.