Labor said initial jobless claims, after seasonal adjustments, fell 5,000 to 326,000 in the week that ended last Saturday.

As a result, the four-week average dropped 6,000 to 333,500. Economists say a weekly average below 350,000 typically indicates an improving job market.

Economists on Wall Street had expected a drop in initial claims last week of 1,000.

Labor said the number of workers filing continuing claims for unemployment benefits rose by 29,000 to 2.75 million in the week that ended Dec. 18, the latest week for which data are available.

The unemployment rate for workers with unemployment insurance held steady at 2.2 percent in that week.