The 'sharp decline' in U.S unemployment was actually a glitch

US jobless claims fell sharply last week mainly due to technical problems that affected some states supplying data, the government said Thursday.

Initial claims for unemployment benefits dived by 31,000 to 292,000 in the holiday-shortened week ending September 7, the Labor Department reported.

Analysts had expected new claims, a sign of the pace of layoffs, to rise to 327,000 from the prior week's unrevised figure of 323,000.

A Labor Department official noted that last week's sharp drop was "not necessarily an indication of a change in labor market conditions."

The sharp drop in claims reflected technical problems in some states in collecting claims data, the official said.

The drop was due to upgrading of computer systems in two states that resulted in fewer claims being processed, as well as the Labor Day holiday, analysts noted.

The federal government was closed September 2 for the Labor Day holiday.

"Because of these factors, a correction is expected in the coming weeks as the extra claims are processed," said Barclays analyst Cooper Howes.

The report comes amid a slow downward trend in claims in recent months, although job growth remains weak.

The four-week moving average of new jobless claims fell to 321,250 from the prior week's revised average of 328,750.

Last Friday, the Labor Department reported the US unemployment rate fell to 7.3 percent in August from 7.4 percent in July as people dropped out of the workforce.

The United States added a tepid 169,000 jobs in August and the prior two months' job numbers were revised sharply lower.