US jobless queue shortest in 3-months; but workers less productive in Q4

Job seekers line up for the Recruit Military veteran job fair in San Diego, California.
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The number of Americans filing new claims for unemployment benefits fell more than expected and hit a three-month low last week, a sign of strength in a labor market that has been hobbled by severe weather.

Separately, the U.S. government sharply revised down nonfarm productivity for the fourth quarter, mirroring the economy's slow growth pace in the same period.

Initial claims for state unemployment benefits dropped 26,000 to a seasonally adjusted 323,000, the Labor Department said on Thursday. That was the lowest level since the end of November and the drop more than unwound the prior week's rise.

Claims for the week ended Feb. 22 were revised to show 1,000 more applications received than previously reported.

Economists polled by Reuters had forecast first-time applications for jobless benefits falling to 338,000 in the week ended March 1.

The four-week moving average for new claims, considered a better measure of underlying labor market conditions as it irons out week-to-week volatility, slipped 2,000 to 336,500.

A Labor Department analyst said no states were estimated and there were no special factors affecting the state level data.

The claims data has no bearing on Friday's employment report for February as it falls outside the reference period for the survey. While unseasonably cold weather has dampened hiring in recent months, the drop in new filings for jobless benefits suggests labor market fundamentals remain strong.

Nonfarm payrolls are forecast to have increased by 150,000 jobs in February, according to a Reuters survey of economists, up from the weather-depressed gains of 113,000 in January and 75,000 in December.

The claims report showed the number of people still receiving benefits after an initial week of aid fell 8,000 to 2.91 million in the week ended Feb. 22. That was the lowest level since December.

The so-called continuing claims have been stuck at higher levels in recent weeks, with economists saying the cold weather was preventing some recipients from going out to search for work and causing companies to delay hiring.

Sluggish productivity

Productivity rose at a 1.8 percent annual rate instead of the previously reported 3.2 percent pace, the Labor Department said. Productivity, which measures hourly output per worker increased at a 3.5 percent pace in the third quarter.

Economists polled by Reuters had expected fourth-quarter productivity would be revised down to a 2.5 percent rate.

The government last week cut its estimate of fourth-quarter gross domestic product growth to an annual pace of 2.4 percent from the previously estimated 3.2 percent rate.

Underscoring the weak trend, productivity increased 1.3 percent compared to the same period in 2012. It was previously reported to have increased 1.7 percent.

For all of 2013, productivity increased 0.5 percent rather than 0.6 percent. That was the smallest gain since 1993 and compared to a 1.5 percent rise in 2012.

Unit labor costs - a gauge of the labor-related cost for any given unit of output - fell at a revised 0.1 percent rate in the fourth quarter, still showing weak wage-related inflation pressures in the economy. They had previously been reported to have dropped at a 1.6 percent rate.

Economists polled by Reuters had expected the drop in unit labor costs would be revised to a 0.9 percent rate.

Unit labor costs declined at a revised 2.1 percent rate in the third quarter. They were down 0.9 percent from the year-earlier period and were up 1.1 percent in 2013, the weakest reading since 2010.

--By Reuters