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The number of people seeking unemployment benefits fell by 27,000 last week, an indication that hiring could improve.

The Labor Department said Thursday that weekly applications dropped to a seasonally adjusted 341,000, the lowest level in three weeks. The four-week average, a less volatile measure, ticked up to 352,500 from a five-year low of 351,000 the previous week.

Applications have declined slowly but steadily in recent months. The four-week average has fallen 5 percent since November. Applications are a proxy for layoffs. As they fall, net hiring typically rises.

The applications figures ?continue to show no sign of new weakening?if anything, the opposite,? said Jim O?Sullivan, an economist at High Frequency Economics. ?The message: the recent trend in employment growth is at least being maintained.?

The snowstorm that hit the Northeast this weekend had limited impact on the latest figures. The report covers the week ended Feb. 9, before the storm hit. The Labor Department said it estimated figures for two states, including Connecticut where the storm closed state offices. Illinois also didn?t provide data.

Job gains have picked up in the past three months, although companies remain cautious about adding workers.

Employers added an average of 200,000 jobs a month from November through January. That?s up from about 150,000 in the previous three months.

The economy added 157,000 jobs in January, the government said earlier this month. And revisions showed employers added 181,000 jobs per month last year, up from an earlier estimate of 153,000.

Still, unemployment remains high. The unemployment rate ticked up to 7.9 percent in January from 7.8 percent in December. Economists expect the rate will decline if hiring continues at last year?s monthly pace of 180,000. The rate fell 0.7 percentage points in 2012.

The number of people receiving benefits also rose. More than 5.9 million people received benefits in the week ended Jan. 26, the latest data available. That was about 325,000 more than the previous week.

The economy contracted at an annual rate of 0.1 percent in the October-December quarter, hurt by a sharp cut in defense spending, fewer exports and sluggish growth in company stockpiles. That?s much slower than the 3.1 percent growth recorded in the July-September period.

Still, economists expect that figure will be revised in the coming months to show a small increase, after more data about last quarter has been reported. Economists at Barclays Capital estimate the economy expanded 0.5 percent in the fourth quarter.

Growth will likely pick up a bit in the January-March quarter to an annual rate of 1.5 percent, analysts forecast. That?s better than the fourth quarter but below last year?s expansion of 2.2 percent.

(AP)

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