Job seekers join a line of hundreds of people at a job fair sponsored by Monster.com on Thursday in New York. Both the total number of people receiving unemployment benefits and the number of new jobless claims fell more than expected last week.

Washington ? The number of new jobless claims and the total number of people receiving unemployment benefits both dropped more than expected last week, though they remain at elevated levels and are unlikely to fall substantially in the coming months.

Few economists expect a turnaround in the battered labor market anytime soon. Still, the tally of initial requests for unemployment benefits fell to 639,000 from the previous week’s figure of 670,000, the Labor Department said Thursday. Analysts expected a smaller drop to 650,000.

Industry demand

In separate reports, factory orders fell for a record sixth consecutive month in January, the Commerce Department said, as demand fell across a wide cross-section of industries. And worker productivity fell more steeply than previously estimated in the fourth quarter, the Labor Department said.

Retailers, meanwhile, said sales dropped in February but at a slower pace than the previous month.

The stock markets, already trading lower, extended their decline after the factory orders report. The Dow Jones industrial average dropped about 260 points, or 3.8 percent, while broader indexes also fell in afternoon trading.

The 670,000 new job claims total reported a week ago was a new high for the current recession and the most since October 1982, when the economy was emerging from a severe downturn, though the labor force has grown by half since then.

The number of people claiming benefits for more than a week fell slightly to 5.1 million in the latest report from 5.12 million, after rising to record-highs for five straight weeks. Analysts expected 5.15 million continuing claims.

But an additional 1.4 million people were receiving benefits under an extended unemployment compensation program approved by Congress last year. That tally was as of Feb. 14, the latest data available, and brings the total jobless benefit rolls to about 6.5 million.

That’s up sharply from a year ago, when 2.8 million people were receiving benefits.

More layoffs expected

The four-week average of new claims, which smooths out fluctuations, increased 2,000 to 641,750, the highest since October 1982.

More job losses were announced this week. General Dynamics Corp. said Thursday it will lay off 1,200 workers partly because of plummeting sales of business and personal jets that forced it to cut production and reduce its profit guidance for the year. Los Angeles-based defense contractor Northrop Grumman Corp. said Wednesday it will lay off 750 workers, mostly in southern California.

Elsewhere, Tyco Electronics Ltd., which makes electronic components, undersea telecommunications systems and wireless equipment, said it is laying off more employees, though it would not say how many.

London-based Diageo PLC, the world’s largest producer of alcoholic drinks, said Wednesday it would eliminate 150 positions in North America next month. The company’s brands include Ketel One vodka, Baileys and Captain Morgan. And Seagate Technology, meanwhile, said it is cutting 20 percent of its vice presidents and other top executives on top of previously announced layoffs.

“There can be no doubt that employers continue to shed labor at a frightening pace, with no end in sight,” Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a client note Wednesday.

The nation’s unemployment rate in January jumped to 7.6 percent, the highest in more than 16 years, while employers cut a net total of 598,000 jobs. The government will release February jobs data on Friday and many economists expect the unemployment rate rose to 7.9 percent while employers cut 648,000 jobs.