The Labor Department said initial claims for unemployment insurance totaled 215,000, the lowest total since the beginning of the year.
The economists were looking for 225,000 first-time filings for the week ended February 26.
The Bureau of Labor Statistics showed that productivity rose in the fourth quarter, but less than the estimate. Unit labor costs increased by 0.9%, well ahead of the expected 0.3%.
The number of people who applied for unemployment benefits last week declined by 18,000 from the previous week and was the lowest since January.
The number of continuing claims went up a week behind the headline number. The four-week moving average, which smooths out weekly volatility, moved down to 1.54 million, the lowest level since 1970.
The number of people receiving benefits fell to 1.97 million, a decline of 62,625.
A closely watched nonfarm payrolls report is a day before the jobless numbers. Wall Street is expecting a gain of 440,000 in February, following up on the much stronger than expected 467,000 total in January.
Companies are still trying to fill 11 million job openings at a time when there is a worker shortage. There are more employment openings than unemployed workers.
According to Labor Department data dating back to about 15 years, average hourly earnings in January were up 5.7%, the highest level since the pre-pandemic environment.
Unit labor costs increased in the last three months of the year, though at a lower rate than the previous quarter due to the jump in productivity. The productivity rise was offset by a 7.5% rise in hourly compensation. Unit labor costs increased 3.6% for the full year, down from a 4.3% increase in 2020.
The inflation issue will be tackled by the Federal Reserve with an expected series of rate increases.
Powell said he expects the first rate hike to come later this month and that the labor market is extremely tight.
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