The Labor Department said Thursday that the less volatile four-week average slid 4,500 to 345,750. The July figures are typically volatile as the government has a difficult time adjusting for seasonal layoffs in the auto industry.
Still, the trend in weekly unemployment claims has been positive and offered hope that a better job market could help lift a sluggish economy later this year.
Applications, which are a proxy for layoffs, have fallen more than 12 per cent this year. That's coincided with average job gains of 202,000 a month since January, up from an average of 180,000 in the previous six months.
The government reports Friday on July job growth and unemployment. Analysts forecast 183,000 jobs were added last month, and the unemployment rate fell to 7.5 per cent from 7.6 per cent in June.
"The labour market continues to improve moderately," Sal Guatieri, senior economist with BMO Capital Markets, wrote in a note to clients.
The total number of Americans receiving unemployment benefits fell below 4.7 million the week that ended July 13, down from nearly 6 million a year earlier.
A private survey released Wednesday showed surprising strength in the job market. The payroll company ADP said that companies created 200,000 jobs in July, the most for that survey since December. And it revised up its estimate of the number of jobs the private sector created in June to 198,000 from 188,000.
The ADP report is derived from payroll data and tracks private employment. It does not report government hiring. ADP's survey has diverged at times from the U.S. Labor Department's more comprehensive monthly jobs report.
Hiring has remained solid despite a weak economy. The Commerce Department reported Wednesday that the economy grew at a 1.7 per cent annual rate from April through June. That's better than the revised 1.1 per cent growth rate from January through March. But it's still too sluggish to rapidly lower unemployment.
The Federal Reserve on Wednesday downgraded its assessment of the economy's strength, saying it is growing only modestly. The Fed expects growth will pick up in the second half of the year.
But the cautious message may signal that the central bank is not ready to slow its bond purchases, which have helped push long-term interest rates down and encourage more borrowing and spending.
Stronger job growth had fueled speculation that the Fed could start reducing its $85-billion-a-month in purchases as soon as September. Many economists now say the Fed could delay the start of the tapering until economic growth strengthens.