Jobless claims drop as layoff fears ease

Washington: The jobless rate in the US held at 9.7 per cent in February and employment declined less than forecast even as severe winter weather may have forced some employers to temporarily close.

Payrolls dropped 36,000 last month after a 26,000 decrease in January, figures from the Labour Department in Washington showed yesterday. Employment fell in construction and increased at temporary-help services. While more people entered the workforce, the unemployment rate was unexpectedly unchanged.

However, the economic expansion that began last year has yet to generate sustained gains in employment, raising the risk that the recovery will cool as households keep a lid on spending.

"We are almost there, at the point where we are consistently adding jobs," Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio, said before the report. "The economy is making incremental but broad-based gains towards improvement."

Meanwhile, US retailers reported on Thursday that sales rose in February by the largest amount since November 2007, a month before the recession began. Factory orders also rose in January, the Commerce Department said.

The reports provide fresh evidence that the economy is steadily growing. But it's not clear when that improvement will translate into new hiring.

Initial claims are considered a gauge of the pace of layoffs and an indication of companies' willingness to hire new workers.

Claims rose sharply two weeks ago partly because several states processed a backlog of claims that had built up from previous weeks when government offices closed due to bad weather.