Dec 26, 2013 05:22 PM EST By Jaleesa Baulkman, UniversityHerald Reporter

During the gift-giving season, the number of Americans filing for unemployment benefits fell last week to the lowest level in nearly a month, while holiday retail sales rose in November and December, Reuters reported.

The U.S. Labor Department announced Thursday that initial claims for state unemployment benefits decreased 42,000 to a seasonally adjusted 338,000, Reuters reported.

The report shows hope for the labor market.

"With labor markets on the mend and consumer confidence on the rise, we look for broader economic improvement to continue pushing claims (lower)," Gennadiy Goldberg, an analyst at TD Securities in New York, told Reuters.

Labor market indicators have pointed to a strengthening labor market.

However, the four-week moving average for new claims, which irons out week-to-week volatility, increased 4,250 to 348,000.

"The underlying trend remains favorable,"  Ryan Sweet, an economist at Moody's Analytics in West Chester, Penn., told Reuters. "We will be able to muster stronger job growth in 2014."

Reuters reported that the claims apparently had little impact on U.S. stock prices and government bond yields, which both rose in thin trading.

Stronger consumer spending appeared to push the U.S. economy to accelerate in the second half of the year and most economists expect the momentum will carry over into 2014.

"The holiday season has also shown positive signs, with sales growing from a year earlier as retailers used deeper discounts and promotions to attract customers," Reuters reported citing data from MasterCard Advisors.

As a result of the improving labor market, the Federal Reserve announced earlier this month that it would reduce its monthly $85 billion bond buying program by $10 billion starting in January.

Payrolls increased solidly in October and November. The unemployment rate dropped to a five-year low of 7 percent in November.

The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid rose 46,000 to 2.923 million in the week ended Dec. 14.

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