The number of people seeking benefits edged down by 3,000 to a seasonally adjusted 420,000, the Labor Department said Thursday.
Weekly unemployment applications at around 425,000 signal modest job growth. But economists say applications would need to dip consistently to 375,000 or below to indicate a significant decline in unemployment. Weekly applications peaked during the recession at 651,000 in March 2009.
The four-week average, a less volatile measure, rose slightly to 426,000. The average had fallen for six straight weeks to the lowest level in more than two years.
Weekly applications are a real-time snapshot of the job market. If they continue to move down, hiring is more likely to pick up. Applications reflect the level of layoffs but can also indicate whether companies are willing to add workers.
In addition, fewer people are receiving unemployment benefits. The total unemployment benefits rolls dropped by 103,000 to little more than 4 million in the week ending Dec. 11, the department said.
That doesn't include millions of additional laid-off workers who are receiving emergency aid under extended unemployment benefits programs set up during the recession. About 4.7 million people are receiving extended benefits for up to 99 weeks. All told, about 8.9 million people obtained unemployment benefits during the week of Dec. 4, the latest data available. That was about 150,000 fewer people than the previous week.
The economy is expected to pick up next year as consumers spend more freely. But growth probably won't be fast enough to rapidly reduce unemployment. Most Americans will have more cash to spend because of a cut in Social Security taxes, which was approved by Congress earlier this month.
Many analysts are predicting that the economy will grow at a 3.5 percent to 4 percent annual pace next year. That would be up from an expected 2.8 percent pace this year.
Still, by one estimate, the economy needs to grow by 5 percent for a full year to bring down the unemployment rate by one percentage point. Many economists expect the unemployment rate to be near 9 percent by the end of next year.