The number of U.S. workers filing new applications for unemployment insurance rose less than expected last week and a measure of underlying trends hit a nearly 16-month low, government data showed on Thursday, underscoring the improving labor market tone.

Initial claims for state unemployment benefits rose only 1,000 to a seasonally adjusted 434,000 in the week ended January 2, the Labor Department said, after declining for two consecutive weeks.

Analysts polled by Reuters had forecast claims rising to 447,000 from a previously reported 432,000.

The labor market has shown strong signs of healing, with the pace of layoffs slowing sharply in the past months as the economy resumed growth following its worst recession in 70 years.

The four-week moving average for new claims dropped 10,250 to 450,250 last week, the lowest since mid-September 2008 and the 18th straight weekly decline. The four-week moving average is viewed as a better measure of underlying trends as it levels out week-to-week volatility.

The number of workers still collecting benefits after an initial week of aid fell 179,000 to 4.80 million in the week ended December 26. This was below market expectations for 4.98 million. So-called continuing claims are below their peak of 6.9 million in June and have declined for three straight weeks.

The insured unemployment rate, which measures the percentage of the insured labor force that is jobless, fell to 3.6 percent in the week ended December 26, the lowest since January last year, from 3.8 percent.

(Reporting by Lucia Mutikani; Editing by Neil Stempleman)

Unemployment