Initial jobless claims dropped sharply to 331,000 last week

WASHINGTON -- In a positive sign heading into Friday’s unemployment report, initial jobless claims dropped sharply last week, offsetting a surprising jump the previous week.

There were 331,000 people who applied for first-time unemployment benefits in the week ended Saturday, the Labor Department said Thursday.

That was down from an upwardly revised 351,000 the previous week, which was the highest level since mid December.

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Economists had expected a more modest drop to 337,000 claims last week.

The four-week average, which smooths out volatility, rose slightly to 334,000 through last week.

Claims have been averaging a level that would be consistent with moderate labor market growth. Such growth last month would be an improvement over December, when the economy added just 74,000 net new jobs.

Economists expect to see a major improvement in job growth in January when the Labor Department releases its report Friday. The consensus projection is the economy added 181,000 net new jobs last month and the unemployment rate held steady at 6.7%.

On Thursday, payroll firm Automatic Data Processing Inc. said the private sector added 175,000 net new jobs.

US Initial Claims for Unemployment Insurance data by YCharts