The number of Americans seeking unemployment benefits fell 9,000 to a seasonally adjusted 346,000 last week, evidence that the job market is still improving modestly, despite signs of slower growth.
The four-week average, a less volatile figure, declined 2,750 to 345,750, the Labor Department said Thursday. That's near the five-year low of 338,000 that the average touched last month.
Applications are a proxy for layoffs. Since March, they have fluctuated between 340,000 and 360,000, a level consistent with steady hiring. Employers added 175,000 jobs in May, almost matching the average monthly gain for the past year. The unemployment rate was 7.6 percent, down from 8.2 percent a year earlier.
Steady job gains could help the economy expand later this year. Growth was only 1.8 percent at an annual rate in the first quarter, the government said Wednesday, down from a previous estimate of 2.4 percent.
The main reason for the lower estimate was consumers spent less than previously thought.
A separate report Thursday showed that consumer spending rose 0.3 percent in May, after falling by the same amount in April. Incomes rose 0.5 percent, the most in three months, the Commerce Department said.
Still, the report revised spending lower in several months earlier this year, causing some economists to lower their forecasts for the April-June quarter.
Nearly 4.6 million people received unemployment benefits in the week ended June 8, the latest data available. That's about 23,000 more than in the previous week.
Slower growth could mean the Federal Reserve may delay its plans to slow its monthly bond purchases, economists said. Those purchases are intended to keep long-term interest rates low.
Chairman Ben Bernanke rattled financial markets last week when he said the Fed would slow its purchases if the economy continued to strengthen. But the Fed may not be able to follow through until growth accelerates from the first quarter's pace. Some economists think that may not happen until the final three months of the year.
Some economic reports this week have been encouraging. U.S. factories are fielding more orders. Higher home sales and prices are signaling a steady housing recovery.
Spending at retail businesses rose in May, a sign that solid job growth has encouraged Americans to open their wallets. And the improving job market has lifted consumer confidence to its highest point in 5½ years.
States with biggest increases or decreases in unemployment applications.
The state figures are for the week ended June 15, one week behind the national data:
States with the biggest decreases:
Illinois: Down 3,401, due to fewer layoffs in construction, manufacturing, and administrative support
New York: Down 2,090, due to fewer layoffs in construction, hotels and food service, and finance
Georgia: Down 1,893, due to fewer layoffs in manufacturing, administrative support, health care, and hotels and restaurants
Missouri: Down 1,591, due to fewer layoffs in transportation and warehousing, construction, hotels and restaurants, and health care
Tennessee: Down 1,542, no reason given
Oregon: Down 1,488, no reason given
States with the biggest increases:
California: Up 15,341, due to layoffs in services
Pennsylvania: Up 4,882, due to layoffs in transportation, hotels and restaurants, construction, and education
Florida: Up 4,850, due to layoffs in agriculture, construction, manufacturing, and retail
Michigan: Up 1,114, no reason given
Maryland: Up 1,065, no reason given