WASHINGTON (Reuters) – The number of U.S. workers filing new claims for unemployment benefits tumbled last week, welcome news for a White House that is predicting an average of 95,000 jobs a month will be created this year.

Initial applications for state unemployment benefits dropped by 43,000 to a seasonally adjusted 440,000 last week, down from a revised 483,000 in the prior week, the Labor Department said on Thursday. Analysts had expected claims to slip to just 465,000.

The prior week’s unexpectedly high reading was blamed in part on a backlog of claims that piled up over the holiday season and a Labor Department official said the report showed this backlog was largely “washed out.”

“The numbers are coming down to an area where we could begin to see some positive job growth,” said Gary Thayer, chief macrostrategist at Wells Fargo Advisors in St. Louis.

The tumble in jobless claims helped underpin U.S. stock prices, which were under pressure on concerns over a European deal to help Greece with its debt crisis. Stocks were modestly lower at midmorning, while U.S. Treasury debt prices were little changed.

ECONOMIC PRESSURE = POLITICAL PRESSURE

Investors are keeping a close eye on jobless claims for evidence that the economy is on the verge of adding jobs again. With the exception of November 2009, payrolls have declined in every month since the recession began in December 2007.

That has piled political pressure on President Barack Obama, whose popularity fell as the jobless rate rose to a 26-year high.

In an economic report released earlier on Thursday, the White House said it expects the economy to create an average of 95,000 jobs a month this year.

“We are, as we’ve said many times, expecting positive job growth by spring,” Christina Romer, chairman of the president’s Council of Economic Advisers, said in an interview with Reuters Insider

However, the White House said the unemployment rate would probably fall only slowly, and it was concerned about the large number of people out of work for a prolonged period.

“Until jobs are being created to replace those we’ve lost — until America is back at work — my administration will not rest and this recovery will not be finished,” Obama said in his annual Economic Report to the U.S. Congress.

Senate Democrats on Thursday released a long-awaited jobs bill that relies on business tax breaks and construction projects to bring down the jobless rate.

The weekly report on unemployment benefits showed the number of people applying after an initial week of aid fell to 4.54 million in the week ended January 30, the lowest in 13 months. That figure is somewhat skewed by the fact that many people have dropped off the rolls because they have exhausted benefits, not because they have found new jobs.

A four-week moving average of initial claims, which smooths out week-to-week volatility, fell by 1,000 to 468,500 last week.

Initial jobless claims had been on an uptrend through January, giving rise to concerns the slow healing of the battered labor market had stalled. The latest report offered hope a longer-term trend toward improvement was still in place.

“The good news … is that the Labor Department administrators are telling us that they have gotten through a backlog and perhaps the labor market hasn’t deteriorated very much in the last two months,” said Cary Leahey, senior economist with Decision Economics in New York.

JOBS DEFICIT HARD TO CLOSE

Most of the projections contained in the Obama’s report to Congress were released in his 2011 budget proposal last week. But the White House projection of job growth was new. It said the economy should create 190,000 jobs per month in 2011.

However, this will not quickly fill the “jobs deficit” that has developed since the recession began in late 2007.

“Only when the unemployment rate has returned to normal levels and families are once again secure in their jobs, homes and savings will this terrible recession truly be over,” the White House said in the report.

U.S. economic output jumped by an annualized 5.7 percent pace in the fourth quarter, but this has not translated into employment gains.

The economy lost 20,000 jobs last month, and although the unemployment rate declined to 9.7 percent, the White House forecast it would average 10 percent this year, spelling out that the rate could tick up as discouraged workers reenter the labor force to look for work.

(Additional reporting by Ellen Freilich in New York, Editing by Andrea Ricci)

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