The Labor Department said Thursday that initial claims for unemployment insurance fell to a seasonally adjusted 550,000 from an upwardly revised 576,000 in the previous week. Analysts expected claims to drop to 560,000, according to Thomson Reuters.
Ohio reported one of the largest drops in claims, down by 1,832 because of fewer auto industry layoffs.
The number of people continuing to receive benefits nationwide fell by 159,000 to nearly 6.1 million, the lowest level since early April.
The economy is showing consistent signs that the worst recession since the 1930s may be over. The Federal Reserve said Wednesday that 11 of its 12 regional banks reported the economy is stabilizing, an improvement from previous reports.
Still, the unemployment claims remain significantly above levels associated with a healthy economy and indicate that jobs remain scarce. Weekly initial claims are generally at 325,000 or below in a growing economy. A year ago, only 3.5 million people were receiving unemployment aid.
Economists closely watch initial claims, which are considered a gauge of layoffs and an indication of companies' willingness to hire new workers.
While the figures are volatile, first-time claims have trended downward in recent months. Initial claims topped 600,000 for most of this year, until falling below that level in early July.
The four-week average of claims, which smooths out fluctuations, fell by 2,750 to 570,000 last week. That's almost 90,000 below the peak for the current recession, reached in early April.
When federal emergency programs are included, the total number of jobless benefit recipients was 9.16 million people in the week that ended Aug. 22, up from 9.14 million in the previous week. Congress has added up to 53 extra weeks of benefits on top of the 26 typically provided by the states.
The large number of people remaining on the rolls is an indication that while layoffs may have slowed, companies are still reluctant to hire new employees.
Job losses have slowed recently. The Labor Department said last week that companies cut 216,000 jobs in August, a large amount but the smallest in a year. The unemployment rate, however, jumped to 9.7 percent from 9.4 percent in July.
The Fed and many private economists predict the jobless rate will hit 10 percent by the end of this year. The recession so far has eliminated a net total of 6.9 million jobs.
More job cuts were announced this week. MEMC Electronic Materials Inc., a maker of semiconductor materials based in St. Peters, Mo., said it plans to shut two plants starting next year, eliminating about 540 jobs. Valero Energy Corp. said it will close part of an oil refinery and lay off 150 employees and 100 contract workers.
Among the states, New York had the largest increase in claims of 4,546, which it attributed to greater layoffs in the transportation and service industries. The next largest increases were in Texas, Florida, New Jersey and Georgia. The state data lag initial claims by a week.
Michigan had the largest drop in claims of 1,915. The next largest decreases were in Ohio, Oregon, Wisconsin and Pennsylvania.