Applications for unemployment benefits dropped by 16,000, the Labor Department said Thursday. The four-week average declined 4,500 to 357,500.
Applications are a proxy for layoffs. When they decline, it signals that companies are cutting fewer jobs. Still, layoffs are only half of the equation. Businesses also need to be confident enough in the economic outlook to step up hiring.
Economists were encouraged by the report, though some cautioned against reading too much into one week's data.
"The downtrend in unemployment remains on track," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics.
In March, employers added only 88,000 jobs. That was a sharp drop from the previous four months, when hiring averaged 220,000 per month.
The unemployment rate fell to a four-year low of 7.6 percent from 7.7 percent in February. But the drop occurred because more people out of work stopped looking for jobs. The government doesn't count people as unemployed unless they are actively looking for work.
Most economists expect hiring improved this month from March's low level. Some economists expect net job gains increased to about 150,000.
A drop in layoffs can make those with jobs feel more confident about keeping them, even when unemployment is high. Layoffs fell in January to their lowest level in the 12 years that the government has tracked the data. When people feel secure in their jobs, they are more likely to spend money and add to economic growth.
More than 5 million Americans received unemployment aid in the week ending April 6, the latest data available. That is about 80,000 fewer than the previous week. Some recipients may no longer receive benefits because they have found jobs. But many have used up all the benefits available to them.
The economy is expected to have grown at a much quicker pace in the January-March quarter. Most economists forecast growth accelerated to an annual rate of more than 3 percent in the first quarter, up from just a 0.4 percent rate in the fourth quarter.
But many analysts now expect growth is slowing in the April-June quarter, mostly because across-the-board government spending cuts that began on March 1. That may have made businesses nervous about adding jobs.