Jobless Claims Drop Works for Hopes of Recovery

Job seekers wait for the opening of a job fair sponsored by Job News in partnership with and The Texas Veterans Commission in San Antonio, TX.
Eddie Seal | Bloomberg | Getty Images
Job seekers wait for the opening of a job fair sponsored by Job News in partnership with and The Texas Veterans Commission in San Antonio, TX.

The number of Americans filing new claims for jobless benefits edged higher last week, but a trend reading dropped to its lowest in five years and pointed to ongoing healing in the labor market.

Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 336,000, the Labor Department said on Thursday.

Economists polled by Reuters had expected 342,000 first-time applications last week.

The four-week moving average for new claims, a measure of labor market trends, fell 7,500 to 339,750, the lowest level since February 2008.

That could bode well for job growth in March.

"There is enough strength in the economy to generate jobs on a sustained basis," said Sam Bullard, an economist at Wells Fargo in Charlotte, North Carolina. Bullard noted however that government belt tightening and the growing risk of a flare-up in Europe's debt crisis created headwinds for the economy.

Last week's claims data covered the survey period for the government's monthly tally of nonfarm jobs. The four-week average of new claims fell 6 percent relative to the survey week in February, when nonfarm payrolls increased by 236,000.

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Still, while layoffs have ebbed over recent months, companies have been cautious about ramping up hiring and theFederal Reserve has appeared worried that belt tightening by the government could dampen progress made in the labor market.

The Fed on Wednesday pressed forward with its aggressive policy stimulus, pointing to still-high unemployment, fiscal headwinds out of Washington and risks from abroad.

(Read More: Fed's $4 Trillion Question: Where's the Exit Door?)

The Fed action came despite a rash of recent data showing the economy gathering strength. Retail sales have been stronger than expected, manufacturing output has picked up and employment growth has quickened, with the jobless rate dropping to 7.7 percent last month from 7.9 percent in January.

The central bank said it will continue buying $85 billion in bonds per month, pledging to keep up its asset purchases until it sees a substantial improvement in the labor market outlook.

Last week, the number of people still receiving benefits under regular state programs after an initial week of aid rose 5,000 to 3.053 million in the week ended March 9.

A Labor Department analyst said jobless claims data had not been estimated for any states and there were no special factors influencing the report. The prior week's claims figure was revised to show 2,000 more applications than previously reported.