Jobless claims dip ahead of jobs report

WASHINGTON (Reuters) - Workers filing for initial unemployment benefits fell 10,000 to a seasonally adjusted 328,000 last week, a government report said, to a slightly lower level than Wall Street expected.

Cold, stormy weather hampered chain stores sales in February -- the same weather pattern that was blamed for a spike in initial jobless claims early last month.

The claims data comes a day before the jobs report, which is closely watched by stock and bond traders because it is one of the best early reads on the health and direction of the U.S. economy.

The claims report added to modest selling in the Treasury bond market, which was mainly caused by gains in global equities markets.

Abnormally severe winter weather was blamed for a 46,000 jump in claims in early February but in the last three weeks claims have fallen by a net 31,000.

"We continue to judge the labor market as healthy. There are downside risks from construction, auto and even subprime lenders if more of them go bankrupt and lay off people," said Michelle Meyer, an economist at Lehman Brothers in New York.

The four-week moving average for claims climbed to 339,000, its highest since an equal level in October 2005, the Labor Department said. But the average is likely to fall next week because the big gain of a weeks ago will drop out of the average.

Meanwhile, chain-store sales were reported up a modest 2.5 percent in February compared to a year ago, the International Council of Shopping Centers said.

"Colder than normal temperatures along with heavy winter storms throughout the U.S. pared some consumer spending opportunities in February," the trade group said.

Wal-Mart Stores Inc. (WMT.N) and Federated Department Stores FD.N reported weak February sales, blaming the weather.

The Labor Department also said the number of workers filing for continuing claims fell 98,000 in the week ended February 24 to 2.55 million, mostly offsetting a 118,000 jump the prior week.

The insured unemployment rate was 1.9 percent in the week ended February 24, down from 2 percent the prior week.

MONSTER DEMAND

Other labor market data on Thursday was mixed.

A gauge of U.S. online labor demand jumped in February to a record high, with the steepest gains in the utilities sector and transportation and warehousing, a report showed on Thursday.

Monster Worldwide, a global online careers and recruiting firm, said its Employment Index rose to 177 in February from 168 in January -- a jump of 5.4 percent. It was 157 a year earlier.

"The significant jump in February marks the Monster Employment Index's largest monthly increase on record, and indicates a sharp rebound in online job availability following January's weaker-than-usual results," said Steve Pogorzelski, group president of Monster Worldwide Inc. MNST.O.

The February figure shows a surge in intended hiring that should be felt in March payrolls, Pogorzelski said.

BETTING ON WEAK SIDE

Derivatives traders were betting on Thursday that U.S. employers added 82,500 jobs in February, according to the preliminary implied median market forecast of a derivatives auction.

That result was below the 93,100 job gain implied in a similar auction on Wednesday and the median forecast of a 100,000 increase among economists polled by Reuters.

The auction provides a view of how Wall Street is positioning ahead of the jobs report.

On Wednesday, a report by ADP Employer Services, said U.S. private employers likely added only 57,000 jobs in February.

The U.S. Labor Department will issue the latest nonfarm payroll report on Friday at 8:30 a.m. (1330 GMT).

The jobless rate is expected to remain at 4.6 percent and the average workweek also staying flat at 33.8 hours.