The number of Americans applying for unemployment benefits tumbled 23,000 last week to 298,000, nearly a six-year low that shows companies are laying off fewer workers.
The Labor Department said the less volatile four-week moving average declined 10,750 to 322,250.
Last week's unemployment benefit applications nearly matched a September figure that was distorted by late reporting from California. When excluding the September report, last week's figures were the lowest since May 2007.
Applications have now fallen in seven of the past eight weeks, a hopeful sign for job growth at the end of the year.
Last week included the Thanksgiving holiday, which can present challenges for seasonal adjustments. But government officials say there were no special factors affecting the report.
Weekly jobless claims are a proxy for layoffs. The steady decline should help boost job gains at a time when hiring has accelerated.
The economy has added an average of 202,000 jobs a month from August through October, up from an average of 146,000 in May through July. The government issues its November employment report on Friday.
A report Wednesday from payroll processor ADP suggested the hiring gains continued last month. Companies and small businesses added 215,000 jobs in November, ADP said.
Greater employment typically boosts income, which helps drive more economic growth. Consumers' spending accounts for roughly 70 percent of economic activity.
Still, the unemployment rate remains high at 7.3 percent. That's well above the 5 percent to 6 percent unemployment rate consistent with healthier job markets. When unemployment is lower, workers have more flexibility to change jobs.
Job growth is a major factor for the Federal Reserve in deciding when to reduce its economic stimulus. The Fed has been buying $85 billion in bonds each month to keep long-term interest rates low and encourage borrowing and spending.