The chairman of the U.S. Federal Reserve, Ben Bernanke, emphasized again Thursday the U.S. won't be fully out of its worst recession in decades without an improvement in hiring.

In a speech to the National Press Club in Washington, Bernanke said the American economy is strengthening and will likely grow at a faster pace this year as more confident consumers and companies spend more.

Federal Reserve chairman Ben Bernanke says high unemployment still stands in the way of a full U.S. recovery. (Jose Luis Magana/The Associated Press)

But he warned that the growth still won't be strong enough to quickly drive down high unemployment, and it could take several years before it returns to more normal levels.

"Until we see a sustained period of stronger job creation," he said, "we cannot consider the recovery to be truly established."

His remarks suggested the Fed will stick with its program to prime the economy by purchasing $600 billion US of Treasury bonds by the end of June.

Bernanke took that same message to the U.S. senate budget committee on January 7th, to justify the bank's decision to stick with the stimulus program.

The Fed chief's speech offered few surprises, BMO economist Jennifer Lee said in a note. He "did not reveal any new or radical thoughts," she said, adding "if anything, he remained very cautious.

He drummed home the point that growth has not been fast enough to absorb all of the newcomers to the job market, including new graduates and those making career changes after being laid off.

Bernanke spoke after the release of data by the U.S. Labour Department showing that the number of Americans applying for unemployment benefits last week fell by 42,000 to 415,000, reversing a spike from the previous week largely caused by harsh winter weather.

The fall resumed a downward trend that took shape late last year and gave rise to hopes that employers would step up hiring.

January employment out Friday

Also Thursday, the Institute for Supply Management, a private trade group, said the U.S. service sector, which employs nearly 90 per cent of America's work force, grew in January at the fastest pace in five years.

The ISM's index of service sector activity rose to 59.4, up sharply from December's reading of 57.1, and the fourteenth straight month of growth.

Any reading above 50 indicates expansion.

Both Canada and the U.S. are set to issue their January employment reports Friday.

Economists are predicting a net gain last month of around 20,000 jobs in Canada and 146,000 in U.S.

With files from The Associated Press