The number of Americans applying for unemployment benefits fell by 6,000 last week to a seasonally adjusted 361,000, a level consistent with only modest gains in hiring.
The Labor Department said Thursday that the less volatile four-week average rose by 2,250, to 368,250, in the week that ended Aug. 4.
Weekly applications bounced around in July, skewed by the difficulty of accounting for temporary summertime layoffs in the auto industry. The seasonal distortions had faded by last week.
Applications measure the pace of layoffs. When they consistently fall below 375,000, it typically suggests hiring is strong enough to lower the unemployment rate.
Paul Dales, senior U.S. economist at Capital Economics, said fewer unemployment applications suggest that job market is fairly stable.
"The pick-up in jobs growth in July may therefore be sustained in August," Dales said.
The economy added 163,000 jobs in July, the biggest increase since February. From April through June, employers had created a lackluster 73,000 jobs a month, not enough to keep up with a rising population.
"The improvement in jobless claims has been a most welcome development," said Dan Greenhaus, chief global strategist at BTIG. But he noted that unemployment claims were still high considering the recession ended more than three years ago. Claims averaged 328,000 in November 2004, three years after the 2001 recession: "So clearly more work needs to be done," he said.
The total number of people receiving some kind of benefits also fell. Nearly 5.8 million received aid in the week that ended July 21, the most recent data available. That's 200,000 less than a week earlier.
Despite the improvement in hiring in July, the unemployment rate ticked up to 8.3 percent, from 8.2 percent in June.
Most economists say growth must be stronger to generate enough jobs to lower unemployment. The economy grew at an annual rate of 1.5 percent from April through June, down from 2 percent in the first quarter and 4.1 percent in the fourth quarter of 2011.
In a hopeful sign, U.S. employers posted the most job openings in four years in June. The Labor Department said this week that job openings rose to a seasonally adjusted 3.8 million in June from 3.7 million in May. That's the most since July 2008. Layoffs fell. A rise in openings could signal better hiring in the coming months. It typically takes one to three months to fill a job.
Even with the increase, hiring is competitive. There were 12.7 million unemployed people in June, or an average of 3.4 unemployed people for each job.
U.S. companies got a bit more out of their workers in the spring. Their productivity grew at a slim 1.6 percent annualized rate in the April-June quarter, signaling that employers may have to hire more if orders pick up.