U.S. unemployment applications fall, productivity rises

WASHINGTON (Reuters) - The number of U.S. workers applying for unemployment benefits fell last week, but a surprising decline in the contracts in January pending home sales to a minimum of nine months highlighted the slow pace of economic recovery.

Initial claims for state benefits fell 29,000 to a seasonally adjusted 469,000, said the Labor Department said Thursday. The figures were in line with expectations.

A separate report from a group of estate agents showed that pending sales of existing homes fell 7.6 percent in January to its lowest level since March last year.

Markets were expecting pending home sales, they anticipate the pace of existing home sales by one or two months, to rise 1 percent.

"I take the number of pending home sales for January and February with a grain of salt because of issues such as climate. However, I think this shows that housing will remain stagnant for a while," said James Meyer, chief economist at Tower Advisers Bridge in West Conshohocken, Pennsylvania.

The National Association of Realtors said that contracts for pending home sales could fall again in February due to inclement weather.

The number of jobless claims, which comes a day before the Government's employment report for February, offered hope that the job growth is in sight.

Initial claims in recent weeks have been distorted by the harsh climate, but a Labor Department official said that special factors had the latest figures.

Severe snowstorms hit much of the country last month, keeping some workers at home while some areas became deadlocked. That will act as a drag on the February employment report.

According to Reuters, are forecast nonfarm payrolls likely fell by 50,000 last month, after falling by 20,000 in January.

Signs of improvement

Reports ranging from consumer spending to manufacturing activity this week suggest that the recovery remains on course with the picture of steadily improving job market.

"Anecdotal evidence and statistics in February suggests that the labor market continues to improve on an underlying basis," said Omair Sharif, an economist at RBS in Stamford, Connecticut.

"Although the weather might have depressed employment figures in February, we continue to expect a healthy growth in wages in the coming months," he said.

A separate report from the Commerce Department showed that orders at U.S. factories rose 1.7 percent in January after an increase of 1.5 percent in December.

As the economy recovers recession, nonfarm business productivity rose at a brisk 6.9 percent annual rate in the fourth quarter, the Labor Department said, rather than the 6.2 percent pace estimated a month past.

The increase in productivity, which measures output per hour of workers was above market expectations of 6.3 percent. Some analysts believe that companies can not continue driving productivity without hiring new workers to start.

There were encouraging signs in the employment report, with the four-week moving average of new claims, which smooths weekly volatility, fell in 3500 to 470,750.

The number of people still receiving benefits after an initial week of aid fell by 134.000 to 4.5 million in the week ended Feb. 20, the lowest level since early January 2009. This measure peaked in June last year and then decline steadily.

(Additional reporting by Doug Palmer and Corbett Daly)