The number of people applying for U.S. unemployment benefits declined 20,000 last week to 331,000, suggesting that Americans are facing fewer layoffs and better job prospects. But the closely watched January employment report due out Friday from the Labor Department will show whether hiring has actually improved.
A scant 74,000 jobs were added in December, the fewest in three years. Most economists forecast that hiring will rebound in January to roughly match the monthly average of 185,000 jobs gained over the past two years.
A private-sector jobs report by ADP, a payroll processor, said Wednesday that companies added 175,000 jobs in January. ADP's numbers often diverge from the government's report. ADP reported 227,000 new jobs in December, or 153,000 more than what the Labor Department did.
Thursday the department said the four-week average of unemployment applications ticked up 250 to 334,000. That remains near pre-recession levels and serves as evidence that job losses have waned.
A total of 3.47 million Americans received benefits as of Jan. 18, down from 3.58 million the week before.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, described the decline in benefit claims as "something of a relief."
Cold weather in January caused work stoppages, leading the number of unemployment benefits applications to swing from week to week. The Labor Department said it had to estimate, for example, the number of applications from Kansas after an ice storm prevented that state from providing data.
"The latest bout of severe weather could easily push claims back up again for a time," Shepherdson cautioned.