The less volatile four-week average for applications fell to 305,000, the Labor Department said Thursday. That's the lowest since May 2007, seven months before the recession began.
Weekly applications could increase next week because of the partial government shutdown. Defence contractors and other companies that do business with the government may temporarily lay off workers. Federal workers who are temporarily laid off may also file for benefits, though their numbers are reported separately and published a week later than the other applications.
Still, the broader trend has been encouraging. Applications, which are a proxy for layoffs, have fallen steadily in the past three months as many companies have stopped laying off workers. That suggests more employers are confident enough in the economy to maintain their existing staffs.
Steady declines in applications are typically followed by more hiring. But that hasn't happened. Instead, job gains have slowed in recent months.
"Companies were not laying off workers ahead of the shutdown but they probably weren't hiring much, either," Jennifer Lee, an economist at BMO Capital Markets, said.
Employers have added an average of just 155,000 jobs a month in the four months through August, according to government data. That's down from an average of 205,000 for the first four months of the year.
On Wednesday, payroll provider ADP said that businesses added just 166,000 jobs in September, evidence that hiring remains sluggish. The ADP figures usually diverge from the Labor Department's more comprehensive monthly employment report, which was scheduled to be released Friday. But the September employment report will now be delayed until the government shutdown ends.
The government was able to release the unemployment benefits report because the data are compiled by the states, unlike the jobs report data, which is gathered by federal workers. The unemployment benefits report also requires little additional analysis by federal officials, a department spokesman said.
About 4 million people received benefits the week ended Sept. 14, the latest data available. That's about 80,000 more than the previous week. A year ago, more than 5 million people were on the unemployment benefit rolls.
The economy may not be growing quickly enough to encourage companies to ramp up hiring. Most analysts forecast that growth has slowed to an annual rate of 1.5 per cent to 2 per cent in the July-September quarter, down from a 2.5 per cent annual rate in the April-June quarter.
Economists predict that growth is rebounding to an annual rate of 2.5 per cent to 3 per cent in the current October-December quarter. But those forecasts were made before this week's impasse that shuttered the government. The shutdown could shave about 0.15 percentage points from the fourth quarter figure for each week it lasts.Suggest a correction