New claims for US unemployment benefits fell last week to 344,000, in line with the recent trend after the previous week's spike higher, government data released Thursday showed.
Claims, an indicator of the pace of layoffs across the country, fell by 22,000 in the week to February 23 from the previous week's revised 366,000, the Labor Department reported.
The four-week moving average fell by 6,750 claims to 355,000.
Concerns were mounting Thursday that the "sequester" federal spending cuts expected to come into effect Friday will cause a spike in layoffs by government contractors and temporary government employees.
Unemployment remains the biggest challenge to the US economy, Federal Reserve Chairman Ben Bernanke told Congress this week.
According to the latest official data, the US unemployment rate was 7.9 percent in January.