The number of Americans filing new claims for unemployment benefits fell more than expected last week.
This suggests that a sharp slowdown in job growth last month was probably a blip.
While other data today showed US housing starts declined in August, upward revisions for groundbreaking in July offered hope that the housing market was continuing to gradually improve.
Initial claims for state unemployment benefits dropped 36,000 to a seasonally adjusted 280,000 for the week ended September 13, the lowest level since July, the Labor Department said.
Economists polled by Reuters had forecast claims falling to only 305,000 last week. The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, slipped 4,750 to 299,500.
The data came a day after the Federal Reserve renewed a pledge to keep interest rates near zero for a "considerable time," while hinting at a faster pace of rate hikes than the Fed was signaling a few months ago.
In a separate report, the Commerce Department said housing starts fell 14.4% to a seasonally adjusted annual 956,000-unit pace last month.
July's starts were revised to show a 1.12 million unit rate, the highest level since November 2007, instead of the previously reported 1.09 million unit rate. That helped to take some of the sting out of the report, which also showed permits fell 5.6% to a 998,000-unit pace in August.
The US housing industry is clawing back after suffering a setback following a spike in mortgage rates last year. It, however, remains constrained by a relatively high unemployment rate and stringent lending practices by financial institutions.
But with the labour market gaining traction, economists expect housing activity to accelerate next year.
Last week's jobless claims data covered the period during which employers were surveyed for September's non-farm payrolls. Claims fell 19,000 between the August and September survey periods.
That suggests payrolls growth rebounded from August's eight-month low, which most economists dismissed as a fluke, noting that payroll gains tend to be smaller in August because of problems adjusting the data for seasonal fluctuations in hiring.
Employers added only 142,000 jobs to their payrolls in August, snapping six consecutive months of job increases above 200,000.
The jobless claims report showed the number of people still receiving benefits after an initial week of aid fell 63,000 to 2.43 million in the week ended September 6. That was the lowest level since May 2007.
The unemployment rate for people receiving jobless benefits fell to 1.8%, the lowest level since November 2006, from 1.9% in the previous week.
