The number of US citizens claiming new unemployment benefits last week dropped below the 400,000 level for the first time since early April, a hopeful sign for the US economy which has struggled to regain momentum.
Initial claims for state unemployment benefits dropped 24,000 to a seasonally adjusted 398,000, the Labour Department said on Thursday.
The US labour market took a beating in May and June, with the increase in non-farm payrolls totalling only 43,000.
We've been surprised on the upside the past several weeks, but this drop does signal that in the most recent couple of weeks, employers are not laying off large numbers of individuals, said Patrick O'Keefe, director of economic research at J.H. Cohn in New York.
What we're seeing is that the claims levels are returning to their more normal level, which is in a positive direction.
A Labour Department official said there were no special factors in last week's jobless claims data.
The four-week moving average of claims, considered a better measure of labour market trends, fell 8,500 to 413,750.
The number of people still receiving benefits under regular state programs after an initial week of aid declined 17,000 to 3.70 million in the week ended July 16, according to the latest release.