WASHINGTON (AFP) - New US jobless claims dropped last week to the lowest level in five years as the ailing jobs market slowly improves, official data released today showed.

Initial claims for unemployment insurance benefits totalled 335,000 in the week ending Jan 12, down a hefty 37,000, or almost 10 per cent, from the prior week's revised level, the Labour Department reported.

The often volatile weekly claims report was lower than the 370,000 analysts expected.

Last week's four-week moving claims average fell to 359,250 from the prior week's 366,000.

Claims, a sign of the pace of layoffs, trended in the 370,000 range for most of 2012.

Marisa Di Natale of Moody's Analytics noted that claims were at their lowest level since early January 2008 and fell for the first time in six weeks.

"Over the past few weeks the claims data have been difficult to interpret because of holiday-related volatility," she said.

"Nevertheless, claims are down 27,000 between the December and January payroll survey reference periods which indicates a modest improvement in job growth over the month." The unemployment rate held steady at 7.8 per cent in December, a four-year low, and job growth last year jumped by 1.4 per cent, the biggest increase in six years.

The January jobs report is scheduled on Feb 1.