Fewer Americans than forecast filed applications forunemployment benefits last week, easing concern that post-holidayfirings were on the rise.

Jobless claims plunged by 50,000 to 352,000 in the week endedJan. 14, the lowest level since April 2008, Labor Departmentfigures showed today in Washington. The median forecast of 41economists in a Bloomberg News survey projected 384,000. A LaborDepartment spokesman said the decrease reflected the usualvolatility seen during this time of year.

Companies are slowing the pace of firings and beginning to stepup the pace of hiring even as a slump in Europe spurred by adefault crisis may limit U.S. growth. The improvement may be a signthat companies are looking to expand their workforces as salesclimb.

“Claims are always choppy around the start of a new year butthere are simply very few industries left that still need to do anyfurther labor cuts,” Russell Price, a senior economist atAmeriprise Financial Inc. in Detroit, said before the report.“Workers are slowly being added as demand has started to pick up abit.”

The cost of living was little changed in December for a secondmonth as stores cut prices to boost holiday sales, another reportfrom the Labor Department showed. The median forecast called for a0.1 percent gain, according to a Bloomberg survey of 78 economists.Excluding volatile food and fuel costs, the so-called core rose 0.1percent as projected.

Jobless claims were projected to decrease from 399,000 initiallyreported for the prior week, according to the Bloomberg survey.Estimates ranged from 363,000 to 405,000. The Labor Departmentrevised the previous week's figure up to 402,000.

Last week's drop was the biggest since September 2005, whenclaims first surged then plunged in the aftermath of HurricaneKatrina.

“Volatility at this time of year is fairly common,” the LaborDepartment spokesman said as the data was released. Claims tend tojump around during holidays as the government has difficultiesadjusting the data for seasonal swings in employment. It's moreimportant to track the moving average in such times, the spokesmansaid.

The four-week moving average, a less volatile measure than theweekly figures, decreased to 379,000 last week from 382,500.

The number of people continuing to receive jobless benefitsdropped by 215,000 in the week ended Jan. 7 to 3.43 million.

Extended Benefits

The continuing claims figure does not include the number ofAmericans receiving extended benefits under federal programs.

Those who've used up their traditional benefits and are nowcollecting emergency and extended payments increased by about105,200 to 3.56 million in the week ended Dec. 31.

The unemployment rate among people eligible for benefits, whichtends to track the jobless rate, fell to 2.7 percent, the lowestsince September 2008, today's report showed.

Thirty-seven states and territories reported an increase inclaims, while 16 reported a decrease. These data are reported witha one-week lag.

Initial jobless claims reflect weekly firings and tend to fallas job growth — measured by the monthly non-farm payrolls report —accelerates.

Payrolls climbed by 200,000 workers in December after rising by100,000 the prior month, and the jobless rate fell to 8.5 percent,the lowest level in almost three years, Labor Department figuresshowed on Jan. 6.

Banks are among companies still trimming staff. PNC FinancialServices Group Inc., the sixth-largest U.S. bank by deposits, willcut 621 jobs in North Carolina and reassign some of the affectedemployees after buying Royal Bank of Canada's U.S. assets.

The lender will redeploy a “significant number” of the people,Fred Solomon, spokesman for the Pittsburgh-based bank, said in aphone interview this week. After the deal is completed, PNC expectsto add jobs including corporate bankers and asset managers, hesaid.

Kraft Foods Inc., the food company planning to split in two thisyear, said it would eliminate 1,600 jobs in North America thisyear, about 40 percent of them as a result of reorganizing U.S.sales, the Northfield, Illinois-based company said this week in astatement.

Some manufacturers are hiring. The Elgin, Illinois, based-U.S.unit of Germany's Harting Deutschland GmbH, a maker of industrialconnectors, will probably hire 20 people this year after doublingthe workforce to 120 since the recession, Chief Executive OfficerRolf Meyer said.

“We have a couple of large orders that we're negotiating on inthe broadcast and medical industries, and these will likely hit inthe next five or six months,” said Meyer, who, supplies customerssuch as General Electric Co. and Siemens AG.

The economy “expanded at a modest to moderate pace” from lateNovember through the end of December, while most industries saw“limited permanent hiring,” the Federal Reserve said in its BeigeBook anecdotal business survey released last week. “The combinationof limited permanent hiring in most sectors and numerous active jobseekers has continued to keep a lid on general wage increases.”

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