Few economists expect a turnaround in the battered labor market anytime soon with companies laying off thousands of workers weekly.
Still, the tally of initial requests for unemployment benefits fell to 639,000 from the previous week's figure of 670,000, the Labor Department said Thursday. Analysts expected a smaller drop to 650,000.
The 670,000 total was a new high for the current recession and the most since October 1982, when the economy was emerging from a severe downturn, though the labor force has grown by half since then.
The number of people claiming benefits for more than a week fell slightly to 5.1 million from 5.12 million, after rising to record-highs for five straight weeks. Analysts expected 5.15 million continuing claims.
But an additional 1.4 million people were receiving benefits under an extended unemployment compensation program approved by Congress last year. That tally was as of Feb. 14, the latest data available, and brings the total jobless benefit rolls to about 6.5 million.
That's up sharply from a year ago, when 2.8 million people were receiving benefits.
The four-week average of new claims, which smooths out fluctuations, increased 2,000 to 641,750, the highest since October 1982.
Meanwhile, retail sales, though they likewise improved from January's numbers and beat analyst expectations.
And the deepening recession caused worker productivity to slide by a worse-than-expected amount in the fourth quarter while wage pressures shot up at the fastest clip in two years.
The Labor Department said Thursday that productivity, the amount of output per hour of work, fell at an annual rate of 0.4 percent in the October-December period. At the same time, unit labor costs were surging by 5.7 percent.
More job losses were announced this week. Los Angeles-based aerospace company Northrop Grumman Corp. said Wednesday it will lay off 750 workers, mostly in southern California. Tyco Electronics Ltd., which makes electronic components, undersea telecommunications systems and wireless equipment, said it is laying off more employees, though it would not say how many.
London-based Diageo PLC, the world's largest producer of alcoholic drinks, said Wednesday it would eliminate 150 positions in North America next month. The company's brands include Ketel One vodka, Baileys and Captain Morgan.
Seagate Technology, meanwhile, said it is cutting 20 percent of its vice presidents and other top executives on top of previously announced layoffs.
"There can be no doubt that employers continue to shed labor at a frightening pace, with no end in sight," Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a client note Wednesday.
Despite the bigger-than-expected drop, Wall Street is set to resume its decline.
Ahead of the market's opening, Dow Jones industrial average futures were down 87, or 1.27 percent, to 6,743. Standard & Poor's 500 index futures and Nasdaq 100 index futures were also lower.
The market reflects China's failure to promise new stimulus measures as many had hoped.
Also, General Motors said in its annual report that auditors raised serious doubt about the automaker's ability to continue operating.