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Unemployment benefit claims sink to lowest level in 3 years

WASHINGTON — The job market suddenly looks brighter.

The number of people filing for unemployment benefits sank last week to its lowest point in nearly three years, and retailers and other service companies posted strong results Thursday for last month.

On the eve of the government’s February jobs report, the news suggests the economy may be about to take off despite growing concerns about inflation.

The stock market had its best day in three months. The Dow Jones industrial average rose enough to erase most of its losses since the unrest in Libya began.

And some analysts raised their forecasts for how many jobs the economy created last month. The consensus is 175,000, but many economists are now estimating 200,000 or more, and they expect the pace to hold for the rest of the year.

That would almost certainly bring the unemployment rate, now 9 percent, down steadily.

“This is a good harbinger of a healthier job market to come,” said economist Sung Won Sohn at California State University.

Applications for unemployment benefits fell by 20,000 to 368,000, the Labor Department said, the third decline in four weeks and the lowest level since May 2008. The figures are adjusted to account for seasonal differences.

The four-week average, which smoothes out volatility to give a broader perspective, fell below 400,000 for the first time since July 2008.

When unemployment claims remain consistently below 375,000, that tends to signal steady declines in the unemployment rate. The figure peaked at 651,000 during the recession.

“The evidence is just stacking up that the labor market is picking up decisively,” said economist Jim O’Sullivan at MF Global.

Americans appear more confident about spending money, which could convince businesses that the time is right to start hiring more workers.

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