U.S. initial jobless claims drop 21,000 -- below estimate

Initial jobless claims fell by 21,000 to 336,000 for the week ended Dec. 29, below the 349,000 consensus estimate, the U.S. Labor Department announced Thursday. Initial claims totaled 326,000 for the same period a year ago.

Meanwhile, the previous week's jobless claims were revised upward to 357,000, the highest weekly level since October 2005, from the 349,000 statistic announced last week.

Also, the four-week moving average dropped to 343,750 from 344,500. Economists view the four-week average as a better indicator of unemployment conditions, as it smooths-out anomalies for strikes, holidays, or other idiosyncratic events.

The number of continuing claims increased by 46,000 to 2.76 million for the week ended Dec. 22, the latest period for which figures were available.

Economic Analysis: This is a mixed bag of news; the current weekly jobless statistic dropped, but last week's statistic was revised higher. Meanwhile, the four-week moving average -- the average economists and analysts concentrate on -- remains at elevated levels and is a 'data point of concern' for the U.S. economy. The U.S. Federal Reserve will keep an eye on that four-week average: if it drifts above 350,000 and remains there, that would suggest a substantial softening of labor market conditions, and most likely, a slowing U.S. economy.