Unemployment benefit applications drop sharply

WASHINGTON (AP) — The number of people applying for unemployment benefits fell to its lowest point in nearly two and a half years, a sign that the job market is slowly improving.

Applications dropped by 34,000 to 388,000, the fewest since July 2008, the Labor Department said Thursday. The number of applications has either fallen or remained unchanged in five of the past six weeks.

Fewer than 425,000 people seeking unemployment benefits signals modest job growth. But economists say applications need to fall consistently to 375,000 or below to bring down the unemployment rate. Applications for unemployment benefits peaked during the recession at 651,000 in March 2009.

The latest report, which covers the week with the Christmas holiday, is considered by some economists to be less reliable than most. One reason is that many state offices close for at least one day. Other seasonal factors make the report more volatile.