The number of Americans filing new claims for jobless benefits dropped by more than expected to 473,000 last week, according to government figures.
But the figures also showed that a measure of underlying jobless trends rose to a nine-month high.
Initial claims for state unemployment benefits fell 31,000 to a seasonally adjusted 473,000 in the week ended August 21, the Labor Department said.
The four-week average of new claims, considered a better measure of underlying labour market trends as it irons out week-to-week volatility, rose 3,250 to 486,750, the highest since late November.
Analysts had forecast that initial weekly jobless claims would slip to 490,000.
