US jobless claims trend lower US jobless claims extended their downward trend last week, falling by 12,000 to 367,000, in a further signal of a strengthening labour market recovery. The labour department's report on first-time claims for unemployment benefits in the week ending January 28 was better than the 371,000 forecast and moved the four-week moving average down 2,000 to 375,750. The previous week's reading was revised slightly higher to 379,000. Analysts were upbeat about the data before Friday's government report on unemployment and job creation in January. This is certainly a positive in front of non-farm payrolls and further supports the view that the US economy is creating more jobs with the prospect for a lower unemployment rate. Perhaps we can break below 8 per cent by year end," said Michael Woolfolk, senior currency strategist at BNY Mellon. The median forecast of economists polled by Bloomberg for Friday's report calls for net job growth of 145,000 last month, compared with 200,000 in December, and for the unemployment rate to hold at a near three-year low of 8.5 per cent. Another report released on Thursday suggested the labour market recovery may remain volatile, however. US companies announced plans to cut 53,486 jobs from payrolls, the most in a month since September, according to Challenger, Gray & Christmas, the staffing company. That was 39 per cent higher than planned redundancies in January 2011 and 28 per cent above December's total. "It is not unusual to see a job-cut surge to start the year," the report said, noting that January typically brings the highest level of redundancies. Retailers and financial companies led cuts over the month, while government redundancies continued to be "relatively low" at 3,021. Also on Thursday, the labour department said productivity in the business sector slowed to 0.7 per cent growth in the fourth quarter compared with 1.9 per cent in the third quarter, suggesting that companies may need to increase hiring in the future to maintain efficiency. "We are at the point in the cycle where squeezing any more output from the existing labour force, with the current capital stock, becomes more difficult," said Alan Ruskin, strategist at Deutsche Bank. The good news is that we are closer to the point where a virtuous cycle of increased demand, driving increased employment and income, generating more demand, is in place.