New U.S. claims for unemployment benefits unexpectedly fell last week to touch their lowest level in more than 2-1/2 years, while nonfarm productivity rose as expected in the fourth quarter. The four-week moving average of unemployment claims — a better measure of underlying trends — dropped 12,750 to 388,500 last week, the lowest since July 2008.
Claims have now held below the 400,000 threshold for a second straight week. Claims below that level are widely viewed as signaling strong jobs growth and economists believe it is only a matter of time before this is reflected in the payrolls numbers.
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