By Alister Bull

WASHINGTON (Reuters) - U.S. weekly jobless claims plummeted last week but the improvement was probably a seasonal quirk rather than a turning point for the recession-ravaged labor market.

Separate reports on Wednesday on business activity in New York City and Milwaukee showed no sign of a recovery, while 30-year fixed mortgage rates eased for the ninth consecutive week as official efforts to bolster the housing market appeared to gain traction.

Although the government reported the biggest drop in jobless claims since 1992, economists said the data did not reflect a change in the labor market which has been weakening for a year.

"We have once again entered a silly season for (jobless) claims," said JPMorgan economist Abiel Reinhart.

Initial claims for state unemployment insurance benefits fell 94,000 to a seasonally adjusted 492,000 in the week ended December 27 from an unrevised 586,000 the prior week, the Labor Department said.

It was the lowest reading for initial claims since the week ended November 1 and well below the 565,000 new claims analysts had expected, according to a poll by Reuters.

"Economic conditions have been difficult and unemployment claims remain higher than anyone would want to see," said White House spokesman Tony Fratto.

The government and U.S. Federal Reserve has pumped hundreds of billions of dollars into the economy to support banks and restore consumer spending.