The Labor Department said Thursday that weekly applications for unemployment benefits rose 8,000 to a seasonally adjusted 312,000. The four-week average, a less volatile measure, fell to 310,250. That's the lowest average since June 2007.
Applications are a proxy for layoffs, so the running average suggests employers are letting go of fewer workers. When businesses are confident enough to hold onto staff, they may also step up hiring. That is a positive sign ahead of May's jobs report to be released Friday.
Fewer Americans are also receiving benefits. The number of recipients declined to 2.6 million, the lowest level since October 2007.
The decline in applications since the start of the year has been accompanied by solid job growth, despite an economy that struggled to grow during the winter.
The economy shrank at an annual rate of 1 per cent during the first three months of 2014, primarily because freezing winter weather slowed factory output and consumer spending.
Still, the pace of hiring was steady and has accelerated this spring.
Employers added 288,000 jobs in April, the most in 2 1/2 years, and the unemployment rate dropped to 6.3 per cent from 6.7 per cent. But that steep decline mostly occurred because fewer people than usual began looking for work. The government doesn't count people as unemployed unless they are actively searching.
In the first four months of this year, employers have added an average of 214,000 jobs a month, up from 194,000 last year.
The government issues its May jobs report on Friday. Economists expect 220,000 jobs were created in May, according to a FactSet survey. But payroll processer ADP said Wednesday that private employers pulled back on hiring in May, adding just 179,000 jobs.
Improved hiring should help boost economic growth for the rest of 2014. More jobs mean more people have paychecks to spend.