Fewer people applied for unemployment benefits last week, providing support for the view that there will be stronger job growth this year.
Applications fell to a seasonally adjusted 385,000 last week, marking the third decline in the past four weeks, the Labor Department reported Thursday.
The four-week average for claims dropped to 386,250. That was the lowest level since July 2008, providing evidence that the job market is on a more solid footing.
Benefit applications below 425,000 signal modest job growth. But the level of applications needs to fall below 375,000 to be seen as a sign of sustained declines in the unemployment rate. Benefit applications peaked at 651,000 during the recession.
Analysts were encouraged by last week's decline in benefit applications which came after applications had risen to 401,000 in the previous week.
"The downward trend in initial jobless claims is undeniable," said Joshua Shapiro, chief U.S. economist at MFR Inc. Shapiro said it provided "strong evidence that the labor market recovery is for real" and he predicted it would continue in coming months.
Companies are finally hiring more after months of sluggish job creation. Employers added 192,000 jobs in February, the biggest gain in nearly a year. The unemployment rate dropped to 8.9 percent, the lowest point since April 2009.
Stronger job growth was a major reason the Federal Reserve this week offerred its most optimistic assessment of the economy since the recession ended. Fed policymakers said the recovery was on "firmer footing" and the jobs market was improving gradually.
At their previous meeting on Jan. 26, the Fed had said that the progress in lowering the unemployment rate had been "disappointingly slow," a phrase it dropped in the statement summing up Tuesday's meeting.
While private economists also believe the economy is gaining momentum, they worry about a number of downside risks. Those range from a surge in oil prices caused by political turmoil in oil exporting countries to a devastating earthquake and ongoing nuclear crisis in Japan, the world's third larest economy.
The benefits report showed that the number of people receiving regular unemployment benefits fell by 80,000 to 3.71 million. That was the lowest level since the week of Sept. 27, 2008.
An additional 4.36 million unemployed workers received benefits under the extended programs during the week of Feb. 26, an increase of 53,000 from the previous week. In total, 8.95 million people were on the benefit rolls during the last week in February.