US jobless claims fell by 20,000 last week

WASHINGTON, Feb 1 (Reuters) The number of US workers applying for jobless benefits fell by 20,000 last week to 307,000, in a much sharper decline than expected that underscored the strength of the labour market, government data showed today.

The latest seasonally adjusted figures from the Labor Department cover the week ending January. 27 and compare with Wall Street forecasts for claims of 315,000, versus a revised 327,000 claims the previous week. This was initially reported as 325,000 applications for aid.

A Labour Department official said there were no special factors impacting last week's numbers.

The stronger-than-expected numbers came a day before the government will release its take on the employment picture in January, which will be closely watched by the Federal Reserve as it monitors wage pressures that could feed inflation.

Analysts polled by Reuters expect the employment report to show that 149,000 new jobs were created last month from 167,000 in December, while the unemployment rate will remain unchanged at 4.5 per cent.

Last week's claims data were gathered too late in the month to be reflected in the January employment report, but they still signaled strength in the labour market.

The four-week moving average -- regarded as a more representative gauge of underlying employment trends because it irons out weekly fluctuations in the data - dropped to 304,750. This was its lowest reading since 301,500 in February 2006.

The number of people who remained on the benefits rolls after drawing an initial week of aid rose by 71,000 to 2.553 million in the week ended Jan. 20, the latest week for which these data were available. There were 2.49 million claims forecast.

REUTERS AKJ PM1933