WASHINGTON — The number of Americans filing new claims for jobless benefits fell last week and a trend reading hit a near five-year low, a sign the grinding recovery in the labor market remains on track. Other data on Thursday showed a sharp drop in productivity in the fourth quarter due to weak economic output. Initial claims for state unemployment benefits dropped by 5,000 to a seasonally adjusted 366,000, the Labor Department said. That was a higher level than analysts had expected, although a downward trend in layoffs suggests the economy is strong enough that employers will need to add to their staffs. "The labor market is improving, but certainly not at a robust rate by any means," said Russell Price, an economist at Ameriprise Financial in Troy, Michigan. The four-week moving average for new claims, a gauge of the trend in layoffs, dropped 2,250 to 350,500. That was the lowest level since March 2008. However, while employers have pulled back on layoffs, they have only added jobs at a lackluster pace and the US Federal Reserve is seen continuing its bond buying program into next year in order to lower borrowing costs and boost employment. In a sign of the difficulty many people have in finding a job, the claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid increased 8,000 to 3.22 million in the week ended Jan. 26. "It still shows that the US job market is on a lethargic pace to recovery," said Joe Manimbo, a market analyst at Western Union Business Solutions in Washington. Claims were volatile in January due to the timing of holidays and the dates on which weeks ended, but a Labor Department analyst said some of that volatility appeared to be receding. US stock prices fell after several retailers reported mixed sales results in January, when consumers took a hit from higher payroll taxes. Prices on government debt rose. — Reuters
