Coming on the heels of a report on Wednesday showing private payrolls in December notched their biggest increase in a year, the data on Thursday suggest the economy's fundamentals remain healthy as it struggles against the headwinds of a strong dollar, bloated inventories and energy sector investment cuts.
Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 277,000 for the week ended January 2, the Labor Department said. The decline partially unwound the prior week's jump, which had lifted claims to their highest level since early July.
Claims were volatile in December, reflecting the challenges of adjusting the data around holidays. Last week was the 44th straight week that claims held below the 300,000 mark, which is associated with a healthy labor market.
That is the longest run since the early 1970s.
"Unemployment claims tend to exhibit heightened volatility throughout the holiday season, even after seasonal adjustment; however, the current data continue to indicate that US labor markets are fundamentally healthy," said Jesse Hurwitz, an economist at Barclays in New York.
The four-week moving average of claims, considered a better measure of labor market trends as it strips out week-to-week volatility, slipped 1,250 to 275,750 last week.
In a separate report, global outplacement consultancy Challenger, Gray & Christmas said US-based employers announced plans to cut 23,622 jobs in December, the fewest since June 2000. That was down 24 per cent from November and the lowest December job-cut total on record.
The good news on the labor market comes ahead of the release on Friday of the government's closely watched employment report for December. According to a Reuters survey of economists, non-farm payrolls likely increased 200,000 in December, on top of the 211,000 jobs added in November. The unemployment rate is seen unchanged at a 7-1/2-year low of 5 per cent.
"The apparent improvement in job security around the end of the year is good news for the nation's workers," said John Challenger, chief executive officer of Challenger, Gray & Christmas.
© Thomson Reuters 2016