The number of Americans filing new claims for jobless benefits fell more than expected last week while activity in the services sector hit a six-month high in March, underscoring the economy's solid fundamentals despite a recent softening in growth.
Harsh weather, the now-settled labor dispute at the country's busy West Coast ports, softer global demand and a strong dollar undercut growth early in the first quarter.
Thursday's upbeat reports, however, implied the slowdown would be temporary.
"The good news is that claims and the services sector data suggest the economy has gained some momentum heading into the second quarter," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.
Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 282,000 for the week ended March 21, the Labor Department said.
That was the lowest level since mid-February and was better than economists' expectations for a dip to 290,000.