The number of Americans applying for unemployment benefits rose last week by 17,000, reversing four weeks of declines. But the number of people seeking aid is consistent with a job market that continues to grow modestly.
Unemployment claims rose the week of Dec. 15 to a seasonally adjusted 361,000 from a revised 344,000 the week before.
The less-volatile four-week moving average fell 13,750 to 367,750, lowest since late October. Applications had surged in early November after Superstorm Sandy, then dropped back.
Just over 5.4 million people were receiving some type of unemployment benefit the week ended Dec. 1, down from nearly 7.2 million a year earlier.
Applications are a proxy for layoffs. So the drop of the four-week average suggests that companies are cutting fewer jobs, even if they aren't hiring enough to lower the unemployment rate significantly. The economy has generated an average of 151,000 jobs a month in 2012, not enough to significantly drive down high unemployment.
The unemployment rate did drop to a four-year low of 7.7 percent in November from 7.9 percent in October. But the rate fell mostly because unemployed people gave up looking for work. The government counts people as unemployed only if they're actively seeking jobs.
Still, the steady drop in unemployment applications suggests that companies aren't laying off workers in advance of the "fiscal cliff" -- the package of tax increases and spending cuts set to take effect next year if Democrats and Republicans can't reach a budget deal.
President Obama said Wednesday that he was "pretty close" to an agreement with House Speaker John Boehner to avoid a Jan. 1 shock to the economy. But Democrats and Republicans are still sparring over details of Obama's effort to raise taxes on higher-income earners.
The U.S. economy has endured weak growth since the Great Recession ended in mid-2009. The Commerce Department reported Thursday that the economy grew at a better-than-expected 3.1 percent annual pace from July through September. It has grown at a tepid 2.1 percent pace the first nine months of the year.
Economists surveyed by the National Association for Business Economics don't expect much progress in 2013. They expect the economy to expand at a 2.1 percent pace next year. They expect unemployment to remain high, averaging 7.7 percent next year.