New US claims for unemployment benefits rose less than expected last week, according to a government report today that hinted at an improvement in labour market conditions.

Initial claims for state unemployment benefits climbed 6,000 to a seasonally adjusted 401,000, the Labor Department said, from a revised 395,000 the prior week.

Economists polled by Reuters had forecast claims rising to 410,000 from the previously reported 391,000.

The data falls outside the survey period for the government's closely watched employment report for September, which will be released tomorrow.

Nonfarm payrolls likely increased 60,000 last month, according to a Reuters survey, after being flat in August. The anticipated gain in nonfarm employment will mostly reflect the return of 45,000 striking Verizon Communications workers to payrolls.

The jobless rate is seen steady at 9.1 per cent.

A Labor Department official said there were no special factors influencing the claims report and there was nothing unusual in the state level data.

Difficulties adjusting first-time applications for seasonal fluctuations had resulted in a big drop the previous week. Despite the rise in claims last week, they remained close to the 400,000 mark, which economists usually associate with some improvement in the labour market.

The weak labour market is the Achilles heel of the recovery, which is under threat from the debt crisis in Europe. Federal Reserve Chairman Ben Bernanke said on Tuesday the economy was "close to faltering" and reiterated the US central bank's commitment to take additional steps to aid growth.

Last week, the four-week moving average of claims, considered a better measure of labour market trends, fell 4,000 to 414,000.

The number of people still receiving benefits under regular state programs after an initial week of aid dropped 52,000 to 3.70 million in the week ended September 24th. That was the lowest level since July.

Economists had expected so-called continuing claims to dip to 3.72 million from 3.73 million the previous week.

The number of Americans on emergency unemployment benefits fell 9,188 to 3.03 million in the week ended September 17th, the latest week for which data is available.

A total of 6.86 million people were claiming unemployment benefits during that period under all programs, down 123,009 from the prior week.

Reuters