The number of people filing new applications for U.S. unemployment benefits dropped last week, a sign that companies may be feeling better about the strength of the economic recovery.

The Labor Department reported today that for the work week ended Feb. 28 new filings for jobless benefits declined by a seasonally adjusted 7,000 to 345,000, the lowest level in two weeks.

The decline was a bit larger than the decrease of 5,000 that some analysts were forecasting.

In another report from the department, the productivity of American workers grew at a modest 2.6% annual rate in the final three months of 2003, according to revised figures. The new figure, which matched economists’ expectations, was slightly slower than the 2.7% pace first estimated a month ago.

Although the fourth-quarter’s performance marked a slowdown from a sizable 9.5% growth rate in the previous quarter, it still represented a respectable pace.

Warmer weather, enticing spring fashions and rising consumer optimism about the economy boosted February sales for many big U.S. retailers.

The strong results issued early Thursday followed a robust January performance and signaled to analysts that consumers continue to be more confident about spending.