The number of Americans filing for unemployment benefits unexpectedly fell last week, pointing to labor market strength that could keep Federal Reserve interest rate hikes on the table this year.

Other data on Thursday suggested the struggling manufacturing sector could be stabilizing, with factory activity in the mid-Atlantic region contracting at a slower pace in February.

"The economy is better than the markets think. We wouldn't rule out another rate hike at the March meeting as financial market turbulence fades away and the economic outlook remains positive," said Chris Rupkey, chief economist at MUFG Union Bank in New York.

Initial claims for state unemployment benefits decreased 7,000 to a seasonally adjusted 262,000 for the week ended Feb. 13, the lowest reading since November, the Labor Department said. The prior week's claims were unrevised.

Economists had forecast claims rising to 275,000 in the latest week. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 8,000 to 273,250 last week.

Prices of U.S. government debt fell after the data, while the dollar edged up against the euro and yen. U.S. stock index futures were trading higher.

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Reuters