Jobless claims fall, leading indicator slips

By Nancy Waitz

WASHINGTON (Reuters) - A surprise drop in the number of new claims filed for jobless aid pointed to a healthy U.S. labor market, but a forward-looking measure of the economy showed momentum has slowed, data released on Thursday showed.

Initial filings for state unemployment insurance aid fell for the third straight week and to the lowest in six weeks, dropping to 316,000 in the week ended March 17 from an upwardly revised 320,000 for the prior week, the Labor Department said.

Jobless claims are at a level economists see as consistent with steady employment growth.

"The data hints that March's payroll numbers will be stronger than a weather-depressed February," said David Sloan, an economist for 4CAST Ltd.

In February, the U.S. economy added 97,000 jobs, the smallest gain in two years, with weather taking its toll. Construction employment fell 62,000, probably prompted in part by cold and stormy weather in much of the country.

Thursday's data had no impact on the U.S. Treasury market as investors focused instead on taking profits following Wednesday's hefty rally after the Federal Reserve in a statement on its policy meeting dropped an explicit reference to the possibility of future interest rate increases.

The Fed kept its benchmark federal funds rate unchanged at 5.25 percent at its meeting on Wednesday, as expected.

In a separate report, the private Conference Board said its Composite Index of Leading Economic Indicators fell 0.5 percent in February following a 0.3 percent drop in January and 0.7 percent rise in December.