U.S. jobless claims drop to lowest in four months

WASHINGTON (Reuters) - The number of U.S. workers applying for jobless benefits fell unexpectedly last week to the lowest level in four months, government data showed on Thursday, indicating the pace of layoffs has not picked up despite a sharp slowdown in economic growth.

First-time claims for state unemployment benefits fell to a seasonally adjusted 301,000 in the week ended January 19, from a slightly revised 302,000 the prior week, the Labor Department said. It was the lowest level since September and the fourth straight weekly decline.

"The jobless claims has just been bizarre here the last three weeks," said Robert Macintosh, chief economist for Eaton Vance Corp in Boston.

"It just doesn't jibe with any of the other economic numbers... I wish there was an explanation as to why it's in a mode where the economy ought to be growing strongly, but all the other indicators are going the other way," Macintosh said.

A Labor Department official said there were no special factors behind the drop, but it was unexpected by Wall Street economists who had forecast an increase to 325,000 from the originally reported 301,000 for the week ended January 12.

U.S. government bond prices pared gains after the surprise drop in new claims hinted the labor market was more resilient than many had thought. U.S. stock index futures rose.

The four-week moving average of new claims, a less volatile measure of conditions because it irons out weekly fluctuations, also fell for the fourth straight week, tumbling to 314,750 from 328,750 the prior week.

The number of people remaining on the benefit rolls after drawing an initial week of aid fell by 75,000 to 2.67 million in the week ended Jan 12, the latest week for which figures are available. Economists forecast the so-called continued claims at 2.72 million.

Despite the large drop, analysts said the number of longer-term unemployed was still a worry.

"Continuing claims have remained much higher than we saw during the fall," said Anna Piretti, an economist with BNP Paribas in New York.

"More people may not be getting fired but people who have left the labor market and lost their jobs seem to have a harder time getting back," she said.

(Additional reporting by John Parry and Kristina Cooke in New York)

(Reporting by Nancy Waitz; Editing by Andrea Ricci)