WASHINGTON (MarketWatch) — New applications for U.S. unemployment benefits fell for the third straight week, but they still haven’t fallen to quite the same level that prevailed before the superstorm Sandy smashed into the Northeast in late October.

Initial jobless claims sank by 25,000 to a seasonally adjusted 370,000 in the week ended Dec. 1, the Labor Department said Thursday. Claims from two weeks ago were revised upward to 395,000 from an initial read of 393,000.

Economists surveyed by MarketWatch had forecast claims to fall to 375,000 as the effects of Hurricane Sandy fade.

In premarket trades, the improved claims data helped reduce losses in stock futures.

The claims data came out one day before the government reports how many new U.S. jobs were created in November. On Friday, Labor is expected to that 80,000 net jobs were added last month, down sharply from 171,000 in October, the MarketWatch survey shows.

Economists say Sandy likely was a big drag on the labor market.

Sandy aftermath

Applications for new jobless benefits had briefly soared to an 18-month high of 451,000 in mid-November before reversing course. Thousands of people who lost jobs or were temporarily unable to work because of the storm didn't file claims immediately.

Yet claims have still not fallen all the way back to pre-Sandy levels in the low 360,000s. If it takes much longer to get back to those levels, it might be a sign that hiring in the U.S. has softened again.

Initial jobless claims down

The latest claims figures are “still in very mediocre territory in terms of its implications for job creation, and close to the pre-storm trend,” said economist Avery Shenfield of CIBC World Markets.

Making it harder to glean employment trends in the claims data is the holiday season that started after Thanksgiving. Companies hire lots of workers temporarily and let them go after the holidays, but government officials can’t always accurately predict how seasonal hiring patterns will affect weekly claims.

A so-called clean reading on claims that gives a good snapshot of labor-market trends might not be available until mid-January, economists say.

Yet even that data could be affected by whether budget talks in Washington to avert the so-called fiscal cliff are successful. The longer the budget impasse continues, the less likely companies are to hire or retain workers.

Job seekers wait to meet with employers at a career fair in New York in October. Reuters

New claims are a rough gauge of whether layoffs are rising or falling.

The one-month average of claims, typically a more accurate number that smooths out weekly volatility, climbed by 2,250 to 408,000. Yet that average has also been distorted by Sandy and it will take longer for the effects to disappear.

In the week ended Nov. 24, meanwhile, continuing claims fell by 100,000 to a seasonally adjusted 3.21 million. Continuing claims reflect the number of people who already receive regular unemployment benefits.

Most states typically offer 26 weeks of unemployment pay.