Fewer people applied for unemployment benefits last week, a sign that layoffs are dropping and employers may be hiring more workers.
The Labor Department said Thursday the number of people seeking benefits dropped 10,000 to 382,000 in the week ending April 2. That's the third drop in four weeks.
The four-week average of applications, a less volatile measure, declined to 389,500. The average is just 1,000 above a two-year low that was reached three weeks ago.
Applications near 375,000 are consistent with a sustained increase in hiring. Applications, which reflect the pace of layoffs, peaked during the recession at 659,000.
The number of people seeking benefits has fallen for several months. The four-week average has dropped by 28,750, or nearly 7 percent, in the past eight weeks. At the same time, companies are adding more employees.
Employers added a net total of 216,000 jobs last month, the Labor Department said last week, and the unemployment rate fell from 8.9 percent to 8.8 percent. Private employers added more than 200,000 jobs in both February and March, the biggest two-month gain since 2006.
"Businesses are hiring, perhaps not at lightning speed, but they are hiring," Jennifer Lee, an economist at BMO Capital Markets, said. "And the jobless rate is inching lower. We're nowhere near `normal' but we're taking steps in the right direction."
Still, the number of applications could move higher in the coming weeks. Toyota Motor Corp. has said that it may temporarily shut down its North American plants later this month. That's because of a shortage of parts from Japan, where the earthquake and tsunami have disrupted production. Other auto companies may also suspend production, which could cause temporary layoffs and a spike in applications for unemployment benefits.
Unemployment benefits will continue to be paid in the event of a federal government shutdown, a Labor Department spokesman said. The benefit programs are administered by the states. If federal employees are temporarily laid off, they will apply for benefits from a separate program, the spokesman said.
The number of people collecting benefits also dropped. The total dipped slightly to 3.7 million during the week ending March 19, one week behind the applications data. That's the lowest total since October 2008. But that doesn't include millions of people receiving aid under the emergency unemployment benefit programs put in place during the recession.
Overall, 8.5 million people received unemployment benefits in the week ending March 19, the latest data available. That's down sharply from the previous week, when nearly 8.8 million people collected benefits.
More hiring is needed to bring down the unemployment rate at a faster pace. The economy still has about 7.2 million fewer jobs than it did when the recession began in December 2007.
Many companies are stepping up hiring this year. McDonald's Corp. said earlier this week that it will hold its first national hiring day April 19 as part of its efforts to fill 50,000 job openings.