Jobless claims drop sharply

WASHINGTON —  The number of newly laid-off workers filing claims for unemployment benefits fell sharply last week to the lowest level in nearly six months.

The Labor Department reported Thursday that applications for jobless claims dropped by 26,000 to 299,000 last week on a seasonally adjusted basis. It marked the first time jobless claims have fallen below 300,000 since the week of July 22.

The improvement was much better than the decline of 9,000 that analysts had been expecting and provided further evidence that the slowing U.S. economy has not begun to seriously affect the labor market outside of specific industries such as housing and auto manufacturing.

But analysts cautioned against reading too much into the latest decline, saying that jobless claims are notoriously difficult to read during holiday periods.

Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, N.Y., predicted a big increase in claims in coming weeks as retail stores lay off temporary workers hired for the holiday shopping season.

The four-week moving average for claims, which helps to smooth out week-to-week volatility, fell to 314,750, the lowest level since early November.

The good news on jobless claims followed a report last week that employers added 167,000 jobs in December, a better-than-expected showing which helped keep the unemployment rate steady at a 4.5%.