New U.S. claims for unemployment benefits fell as expected last week, with the four-week moving average dropping to its lowest level in more than 2-1/2 years, pointing to a strengthening labor market.
Initial claims for state unemployment benefits fell 16,000 to a seasonally adjusted 385,000, the Labor Department said.
Economists polled by Reuters had forecast claims falling to 387,000. The prior week's figure was revised up to 401,000 from the previously reported 397,000.
The four-week moving average of unemployment claims -- a better measure of underlying trends - dropped 7,000 to 386,250, the lowest since mid-July 2008 and staying below the 400,000 level for a third straight week.