Thursday's data came a day before the Government issues its expected March employment report, which is expected to show that nonfarm payrolls grew by only the second time since the recession that started in December 2007.
The labor market has been a burden for recovery has been led by manufacturing. Employment growth is key to sustaining economic recovery when it disappears the momentum of the re-accumulation of inventories at the end of the year.
"This is good news for the manufacturing sector, which in turn is good news for the progress of overall recovery," said Pierre Ellis, senior economist at Decision Economics in New York, referring to strong manufacturing report.
Initial claims for unemployment insurance dropped by 6,000 to a seasonally adjusted rate of 439,000 in the week ended March 27, the Labor Department said.
Analysts polled by Reuters had expected a figure of 440,000 new applications, from 442,000 reported preliminarily for the period.
But the data does not have a major impact on the official report of March payrolls, as the drop is outside the period when the survey is conducted monthly employment.
The four-week moving average, a more reliable because it smooths weekly volatility, fell to 447,250 applications in 6750, the lowest level since September 2008.
Later it was reported that the index of national manufacturing activity of the Institute for Supply Management rose to 59.6 last month from a reading of 56.5 in February. This was the highest reading since July 2004 and was above the market forecast of 57.0.
The figure is above the 50 mark that separates growth from contraction.
However, the indicator measuring employment fell slightly.
On Wall Street, stocks extended early gains after the manufacturing report, while prices of Treasury debt deepened its losses. The dollar rose against the yen and the euro.
According to a Reuters survey, payroll employment in the U.S. rose by 190,000 jobs last month, boosted by massive recruitment for the census of 2010 and a rebound after seasonal job losses in February. Payrolls fell by 36,000 in February.
The median forecast of 20 economists whose estimates are usually the most successful in March indicates that 200,000 jobs were created.
Unemployment rate remains high
The Treasury secretary, Timothy Geithner, said in an NBC program that while the economy starts to create new jobs, the unemployment rate will remain high for a while. Unemployment stood at 9.7 percent for two months.
"Deseocupación rate is still shockingly high and will remain unacceptably high for a long period of time," said Geithner.
Although applications for unemployment benefits have resumed their downward trend after stagnating earlier this year, are still on the level of 400,000, which analysts say indicates stability in the labor market. However, still expect employment to keep growing.
"New applications tend to focus more on job losses in the hiring and it seems that this cycle could see that nonfarm payrolls positive pass near the current levels of applications," said Alan Ruskin, head of FX strategy RBS Global Banking & Markets.
The number of people still receiving unemployment benefits after drawing an initial week of aid fell 6,000 to 4,66 million in the week ended March 20, the lowest level since December 2008.
Analysts had expected that this category down to 4.61 million applications.
On the other hand, planned layoffs in U.S. companies rose last month, although the cuts planned for the first quarter decreased strongly from a year ago, said global consultancy Challenger, Gray & Christmas, Inc.
While areas such as manufacturing are successful, the continued weakness in the construction sector is limiting the growth potential of the economy.
U.S. spending on construction fell in February for the fourth consecutive month to its lowest level in nearly seven and a half years, pressured by weakness in several sectors of the area, from building houses to public infrastructure projects, the department said trade.
Overall construction spending dropped 1.3 percent to a seasonally adjusted annual rate of 846,230 million dollars, after falling 1.4 percent in January, initially reported as a decline of 0.6 percent.
The February decline exceeded the 1.0 percent low estimated by economists polled by Reuters.
(Reporting by Lucia Mutikani, Glenn Somerville and Steven C. Johnson)
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