The tally of newly laid-off workers seeking unemployment benefits fell unexpectedly for the fifth straight week, a hopeful sign that the job market is slowly improving.
Still, claims remain above the levels that most analysts say would be consistent with an economy that is adding jobs. The unemployment rate is at 10.2 percent and expected to keep climbing into next year.
First-time claims for unemployment insurance dropped by 5,000 to a seasonally adjusted 457,000, the lowest total since the week of Sept. 6, 2008, the Labor Department said Thursday. Wall Street economists expected an increase, according to a survey by Thomson Reuters.
The ongoing decline in claims signals that employers could start adding jobs by as early as January or February, economists said. The nation's economy has shed jobs for 22 straight months, the longest stretch since World War II.
"The surprise further drop in jobless claims ... is a very encouraging sign that the U.S. economy may be closer to the point of net job creation than we had thought," John Ryding, an economist at RDQ Economics, wrote in a research note.
Many economists say that claims need to fall to about 425,000 for at least a month to indicate that employers are hiring more people than they are firing.
The department's employment report for November, to be released Friday, is expected to show that employers shed another 130,000 jobs after cutting 190,000 in October. Economists forecast the unemployment rate will remain at 10.2 percent.
A Labor Department analyst said the closing of state unemployment offices for last week's Thanksgiving holiday was responsible for some of the decline.
Economists closely watch initial claims, which are considered a gauge of layoffs and a sign of whether companies are willing to hire.
The four-week average of claims, which smooths out fluctuations, dropped for the 13th straight week to 481,250, about 180,000 below the peak for this recession, reached this spring.
But the Federal Reserve said in a report Wednesday that employers in most regions are reluctant to hire new workers, even as the economy stages a modest recovery.
Meanwhile, the number of people claiming unemployment benefits for more than a week rose by 28,000 to 5.5 million, the department said. Analysts had expected a decline.
That total doesn't include millions of unemployed Americans that are receiving benefits under extended programs paid for by the federal government.
About 4.5 million people were receiving extended benefits in the week ended Nov. 14, the latest data available. That's an increase of about 300,000 from the previous week. The jump is a result of Congress adding another 14 to 20 weeks of extra benefits last month, the fourth extension since the recession began and the longest total extension on record.
That boosted the total number of weeks a person could collect unemployment to as much as 99 in the hardest-hit states.
Layoffs continued this week. Gannett Co. said it was cutting 26 newsroom jobs at its flagship USA Today newspaper and eliminating 11 positions at USA Weekend magazine. Another media company, the Greenspun Media Group, which publishes the Las Vegas Sun, announced it was reorganizing its operations in a cost-cutting move and would lay off an unspecified number of workers.
Among the states, California had the largest increase in claims, with nearly 15,000, which it attributed to layoffs in the service industry. Illinois, North Carolina, Pennsylvania and Texas had the next largest increases. The state data lag initial claims by one week.
The largest decrease in claims was in Michigan, with a drop of 1,242, which it attributed to fewer layoffs in the auto industry. Indiana, Hawaii, Oregon and the Virgin Islands also reported declines.