The Labor Department says weekly unemployment benefit applications fell 37,000 to a seasonally adjusted 335,000. That's the lowest level since January 2008, just after the recession began.
The four-week average, a less volatile measure, fell to 359,250.
The applications data can be uneven in January. Job cuts typically spike in the second week of the month as retailers, restaurants and other companies lay off temporary workers hired for the winter holidays.
Last week, the layoffs weren't as large as expected, a department spokesman said. That caused a steep drop in the seasonally adjusted data.