The number of people requesting unemployment benefits last week plunged to a nearly three-year low, bolstering likelihood that companies will increase the pace of hiring this year.
Applications for unemployment benefits fell by 20,000, to a seasonally adjusted 368,000, the U.S. Labor Department reported Thursday. It was the third decline in the last four weeks. Applications are now at their lowest level since May 2008.
The four-week average for applications, a less volatile figure, fell last week to 388,500. That's the lowest level since July 2008, the last time the four-week average was below 400,000.
Economists say applications that remain consistently below 375,000 tend to signal declines in the unemployment rate. Applications for benefits peaked during the recession at 651,000.
The downward trend in applications suggests that companies are easing the pace of layoffs now that the economy is gaining momentum. During the recession, companies slashed work forces, cut or froze workers' pay and took other aggressive steps to reduce costs.
Companies are expected to increase hiring in the month ahead.
Employers probably added 175,000 new jobs in February, economists predict. That would mark an improvement from an anemic 36,000 in January when snowstorms and bad weather hurt job gains. The government releases the employment report for February on Friday.
At the same time, economists think the unemployment rate edged up to 9.1 percent in February as more jobseekers — perhaps feeling better about their prospects — stream into the labor market looking for work.
Stronger job creation is needed to steadily reduce unemployment. The economy needs to produce at least 200,000 a month on a consistent basis for that to happen.
Thursday's report also showed the number of people receiving unemployment benefits dropped to 3.77 million, the lowest level since mid-October 2008.
That doesn't include millions of people enrolled in emergency unemployment benefit programs funded by the federal government. Another 4.5 million unemployed workers received benefits under the extended programs during the ending Feb. 12, the latest data available. Altogether, 9.2 million people were on the benefit rolls that week.