US jobless claims drop steeply

WASHINGTON, July 9 (Reuters) - The number of U.S. workers filing new claims for jobless benefits fell sharply last week but the decline was amplified by seasonal adjustments mainly connected with fewer-than-expected layoffs in the automotive sector, the Labor Department said on Thursday.

Initial claims for state unemployment insurance fell 52,000 to a much lower-than-expected seasonally adjusted 565,000 in the week ended July 4 from 617,000 the prior week, the Labor Department said. It was the lowest reading since January. Analysts polled by Reuters had forecast claims to drop to 605,000 from a previously reported 614,000.

But in a sign of ongoing employment weakness, so-called continued claims of people still on jobless aid after an initial week of benefits rose by 159,000 to a record 6.883 million in the week ending June 27, the latest for which data is available. (Reporting by Alister Bull, Editing by Andrea Ricci)