New claims for unemployment benefits fell more than expected in the latest week, showing that the labor market continues to improve, albeit slowly and in fits and starts.

The Labor Department reported Thursday that seasonally-adjusted jobless claims fell 12,000 to 367,000 in the week ended Jan. 28 versus a revised 379,000 the prior week. Economists had expected a drop of about 7,000.

The four-week moving average, considered a better measure of labor market conditions because it levels out wrinkles in the data, was 375,750, a decrease of 2,000 from the previous week's revised average of 377,750.

"This is certainly a positive in front of non-farm payrolls and further supports the view that the U.S. economy is creating more jobs with the prospect for a lower unemployment rate. Perhaps we can break below 8 percent by year end," BNY Mellon senior currency strategist Michael Woolfolk told Reuters.

The broader trend in weekly unemployment benefit applications has been encouraging. They have been on a steady decline since last fall and plummeted three weeks ago to 352,000, nearly a four-year low. The four-week average, which smooths week-to-week fluctuations, has fallen to 377,500.

When applications fall consistently below 375,000, it usually signals that hiring is strong enough to lower the unemployment rate.

Layoffs are down and hiring has improved. In December, employers added 200,000 jobs, and the unemployment rate fell to 8.5 percent, the lowest level in nearly three years.

The government reports Friday on January job growth and unemployment. Economists predict the economy added 155,000 net jobs, and the unemployment rate stayed unchanged.

Still, the labor market recovery has a long way to go, with 23.7 million Americans either out of work or underemployed.

The Federal Reserve last week acknowledged the improvement in the labor market, but noted the jobless rate remained too high and said it would likely keep overnight lending rates near zero until at least late 2014.

Chairman Ben Bernanke, who is due to testify before lawmakers later on Thursday, has said the Fed was mulling further asset purchases to help foster stronger economic growth.

The number of people still receiving benefits under regular state programs after an initial week of aid fell 130,000 to 3.437 million in the week ended January 21, the lowest since September 2008.

Economists had forecast so-called continuing claims at 3.55 million.

The number of Americans on emergency unemployment benefits rose 100,392 to 3.022 million in the week ended January 14, the latest week for which data is available.

A total of 7.67 million people were claiming unemployment benefits during that period under all programs, little changed from the prior week. (Source: MSNBC)

Story Date: February 3, 2012