First-Time Jobless Claims Drop in Mid-February : * Unemployment: 21,000 fewer filed in week ended Feb. 22. But some say holiday skewed figures.

Unemployment lines shortened in mid-February as the number of workers seeking jobless benefits for the first time fell by 21,000, the government said Thursday, offering further hope that the economy is improving. It was the first decline in three weeks.

But some economists said the number of claims may have been distorted by the Presidents’ Day holiday, when unemployment offices were closed.

The Labor Department reported that the number of unemployed workers filing initial claims for state jobless benefits fell to 437,000 in the week that ended Feb. 22, down from 458,000 the previous week.

Secretary of Labor Lynn Martin said the report on weekly claims--coupled with other recent reports of rising home sales and improvement in manufacturing--”indicates that the economy is pointed in the right direction and may be starting to gain momentum.”

But economists said the number of claims filed may have been depressed during the week because of the holiday closing of state unemployment offices.

“I am not going to leap to the conclusion that things suddenly have improved,” said Robert Dederick, chief economist at Northern Trust Co.

The Labor Department today will report on the employment picture for all of February. Many economists expect to see a small increase in the number of new jobs created, but no improvement in the nation’s 7.1% unemployment rate.

Nevertheless, the four-week moving average number of claims, which economists say provides a clearer picture of unemployment trends, also fell, to 445,250 from 448,500 in the previous period, the department said.

Only three states--Massachusetts, 3,057; Delaware, 1,984, and Rhode Island, 1,112--reported more than 1,000 layoffs during the week ending Feb. 22. Massachusetts officials cited service industry job losses. Delaware said auto layoffs produced its claims rise, while Rhode Island officials had no comment.

The biggest drops in new claims came in Texas, 6,571; New York, 6,477; Ohio, 4,267, and Oklahoma, 4,207. New York cited the holiday-shortened workweek, while officials in the other states had no explanation for the drops.

“We do seem to have crested,” Dederick said. First-time jobless claims hit about 500,000 a week last year in the midst of the recession.

“I think we are in the bottoming-out stage and there is going to be a pickup,” he added. “But I don’t see anything to suggest that it will be anything other than a draggy recovery.”

That is not good news for President Bush, who is battling to persuade voters that an economic recovery is on the way. The economy has become the top issue in this year’s presidential election campaign.