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Initial jobless claims fell by 7,000 to a seasonally adjusted 340,000 in the week ended March 3, putting them at the lowest level since mid-January, the Labor Department said Thursday. Economists surveyed by MarketWatch forecast claims to rise to 353,000 from a revised 347,000.
What's more, the monthly average of jobless claims, a number that smooths out weekly volatility, fell by 7,000 to 348,750. That marks the lowest level since March 2008.
The drop in U.S. claims helped support U.S. stocks in Thursday action. The Dow Jones Industrial Average DJIA +0.23% was mildly higher.
Weeky claims, a rough gauge of layoffs, have mostly strayed north of 360,000 over the past year. The recent improvement - claims have come under 350,000 in five of the past nine weeks - might suggest the labor market is entering a new phase.
The big question is whether the improvement is the result of faster hiring or fewer layoffs.
"It's important to remember that the problem in the labor markets for several years now has not been the pace of layoffs," said Pierpont Securities chief economist Stephen Stanley. "Rather, it has been painfully slow hiring."
The monthly employment for February, which comes out Friday morning, might offer additional evidence to sway the debate.
The economy added an average of more than 200,000 jobs a month in the fourth quarter of 2012 despite worries about the "fiscal cliff" budget standoff in Washington that was ultimately resolved by the imposition of higher taxes. By contrast, hiring was much slower last spring and summer.
The pace of hiring did cool off in January, however, and economists expect another modest reading in February. Higher taxes and billions in federal spending cuts triggered by the so-called sequester could be restraining job creation early in the year, some economists suggest, though other reports like the ADP employment indicator see little slowdown. Read: ADP says rivate-sector jobs growth beats expectations
The U.S. likely added 160,000 jobs in February after gaining 157,000 in January, according to economists polled by MarketWatch.
In the week ended Feb. 23, meanwhile, continuing claims inched up by 3,000 to a seasonally adjusted 3.09 million.
Continuing claims reflect the number of people who already receive regular unemployment benefits. Most states typically offer 26 weeks of unemployment pay.
Jeffry Bartash is a reporter for MarketWatch in Washington.