Weekly jobless claims zigzag down again

New claims for unemployment benefits in the United States fell more than expected last week, pointing to further healing in the nation's battered jobs market.

Jobless claims have zigzagged in the last few weeks, but the trend -- reinforced by the latest drop -- suggests employers have grown less eager to lay off workers, offering hope they could also step up hiring.

Initial claims for state unemployment benefits slid 12,000 last week to 367,000, the Labor Department said Thursday.

"The big whacking of workforces is over, and we're just waiting for pickup in activity to lift hiring a bit more strongly," said Pierre Ellis, an economist at Decision Economics in New York.

The United States is still limping back from the 2007-09 recession, but job growth has gained momentum in recent months, and the unemployment rate dropped to 8.5 percent in December, its lowest level in nearly three years.

Still, dark clouds remain over the economy as Europe struggles with a sovereign debt crisis and likely recession.

Federal Reserve Chairman Ben Bernanke told lawmakers Thursday Europe's crisis still threatens the U.S. recovery, and he pledged the Fed would do everything it can to prevent any spillover.

Economists and investors will look to a report on U.S. employment for January Friday to get a firmer fix on the health of the labor market.

The report is expected to show the jobless rate held steady while payroll growth slowed a bit from December.

While Thursday's claims data has no direct bearing on the payroll report, analysts said the trend in claims was nonetheless positive.

A separate Labor Department report showed growth in U.S. nonfarm productivity slowed in the fourth quarter. Some analysts said that suggested companies might be closer to squeezing all they can out of their current staff.