A pick-up of consumer spending, which accounts for about 70 percent of the economy, heading into the holiday season could spur the additional hiring needed to bring down persistently high unemployment, which stands at 9.6 percent.
Analysts say that several more weeks of larger drops in those collecting benefits could signal that job creation has turned a corner.
The economy needs jobless claims drop into the low 400,000s or high 300,000s — a decrease of 50,000 to 70,000 a month — to reflect stronger job growth in the private sector and propel the recovery.
The figures have hovered around 450,000 for most of the year, and hiring hasn't picked up enough pace to make a dent in the unemployment rate.
The four-week moving average, which smoothes out the volatility of the weekly number and provides a better gauge of the employment situation, fell by 5,500 to 453,250.
The total number of people continuing to receive unemployment insurance fell by 122,000 in the week ending Oct. 16 to 4.36 million, the lowest since November 2008.
Those receiving extended benefits — up to 99 weeks in some states — who have exhausted their traditional benefits dropped sharply by 414,000 to 4.66 million in the week that ended Oct. 9, the latest data available.