Weekly jobless claims fall 5,000 to 227,000
Continuing claims drop 22,000 to 1.838 million
Private payrolls increase 99,000 in August

WASHINGTON, Sept 5 Reuters The number of Americans filing new applications for jobless benefits declined last week as layoffs remained low, which could help to allay fears that the labor market was deteriorating.

The weekly jobless claims report from the Labor Department on Thursday, the most timely data on the economy39;s health, also showed unemployment rolls shrinking to levels last seen in midJune. It reduces the need for the Federal Reserve to deliver a 50 basis points interest rate cut this month.

Most economists expect the U.S. central bank to kick off its easing cycle with a quarterpoint rate reduction as domestic demand remains solid. A stepdown in hiring, which pushed the unemployment rate to a near threeyear high of 4.3 in July rattled investors and fanned concerns that a recession was stalking the economy.

The jobless claims data remain consistent with a gradual increase in unemployment, rather than the sharp jump reported for July, said Ian Shepherdson, chief economist at Pantheon Macroeconomics. Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 227,000 for the week ended Aug. 31, the lowest level since early July. Economists polled by Reuters had forecast 230,000 claims for the latest week.

Claims had been bouncing around the 230,000 level since pulling back from an 11month…