WRAPUP 4-US jobless claims data boosts labor market outlook

* Initial claims fall to 383,000, lowest in 2-1/2 years

* Four-week moving average drops to 415,500

* Wholesale inventories rise 1 pct in Dec to 2-year high
(Adds details, updates markets to afternoon)

By Lucia Mutikani

WASHINGTON, Feb 10 (Reuters) - New U.S. applications for
unemployment benefits dropped to a 2-1/2-year low last week,
pointing to a stronger footing for the labor market as the
economic recovery gathers momentum.

The fall in claims reported by the Labor Department on
Thursday partly reflected the unwinding of a weather-related
spike in late January but analysts said it was consistent with
other indicators suggesting a strengthening labor market.

Initial claims for state unemployment benefits fell 36,000
to a seasonally adjusted 383,000, the lowest since early July
2008, the Labor Department said.

Economists, who had forecast claims slipping to 410,000,
said applications need to stay below the 400,000 level for some
time to signal consistent job growth.

"We had a bit of volatility due to all the harsh weather,"
said Mark Vitner, a senior economist at Well Fargo Securities
in Charlotte, North Carolina. "Despite all that, layoffs seem
to be trending down and that should allow for job growth to
pick up over the next few months."

The data followed Friday's report that showed only 36,000
jobs were created in January, which was blamed on severe snow
storms that lashed large parts of the country. But the jobless
rate in January fell to a 21-month low of 9 percent.

A Labor Department official said claims were still
unwinding some of the weather effects that pushed up filings
late last month. Some economists said blizzards last week in
the country's Midwest could also have been a factor.

Still, investors saw the claims report as yet more evidence
that the economic growth pace was accelerating. Safe-haven U.S.
government bond yields rose, while the dollar gained broadly.

A weak earnings outlook from Cisco Systems Inc (CSCO.O)
pulled U.S. stocks lower and the Dow Jones industrial average
.DJI was on track to snap an eight-day rally.

The economy grew at a 3.2 percent in the fourth quarter and
all indications are that solid growth momentum will continue
through much of this year.
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Graphic-US jobless claims:

r.reuters.com/tyx87r

Graphic-US wholesale inventories, sales:

r.reuters.com/bez87r

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COMPANIES ARE HIRING

That brightening outlook bodes well for the labor market.
Offering more anecdotal evidence of a pick-up in hiring,
consulting firm Deloitte will add about 18,000 jobs by May,
just over two-thirds of which will be in the United States,
returning to pre-crisis hiring levels.

"We are seeing growth and we are seeing a fairly steady
increase in certain market segments and it's projected to
continue into our next fiscal year," Deloitte's National Campus
Recruiting leader Diane Borhani told Reuters.

But given the magnitude of job losses during the recession,
the unemployment rate will remain high. Federal Reserve
Chairman Ben Bernanke told lawmakers on Wednesday it could take
about four years to get the jobless rate down to its "normal"
range between 5 percent and 6 percent.

A separate report from the Commerce Department showed
wholesale inventories rose 1 percent to their highest since
January 2009. The gain beat the 0.7 percent increase forecast
by economists. For details, see [ID:nN10292681]

Economists said the inventory data had no impact on the
government's advance gross domestic product growth estimate as
the surge was driven by the auto component.

Wholesale inventories, excluding autos rose much less than
the government had anticipated its advance estimate. December's
trade report on Friday and business inventories data on Tuesday
will offer more clues on whether the advance GDP growth
estimate will be revised later this month.

Underscoring the firming labor market tone, the four-week
moving average of unemployment claims -- a better measure of
underlying trends - dropped 16,000 to 415,500 last week.

"It is just not possible for claims to fall this far and
not see some beneficial effect in payrolls. After the
weather-affected January report, we think February payrolls
will rise by about 250,000," said Ian Shepherdson, chief U.S.
economist at High Frequency Economics in Valhalla, New York.

The number of people still receiving benefits under regular
state programs after an initial week of aid declined 47,000 to
3.89 million in the week ended Jan. 29. Economists had expected
so-called continuing claims to fall to 3.90 million.
(Additional reporting by Mark Felsenthal; Editing by Neil
Stempleman)