New claims for unemployment insurance dipped last week, suggesting that companies are laying off fewer workers as the budding economic recovery unfolds.

The Labor Department reported Thursday that for the work week ending April 27, new claims for jobless benefits went down by a seasonally adjusted 10,000 to 418,000, the lowest level since March 23.

Even with the decline, a government analyst said, the level was inflated as a result of a technical fluke.

The distortion is coming from a requirement that laid-off workers seeking to take advantage of a federal extension for benefits must submit new claims.

Congress recently passed legislation signed into law by President Bush that provided a 13-week extension of jobless benefits.

The fluke has clouded the layoffs picture for several weeks. But the government analyst said the refiling requirement is having much less of an effect on the claims numbers than in previous weeks.

The more stable four-week moving average of new claims, which smoothes out weekly fluctuations, also fell last week to 435,750, the lowest level since the beginning of April.

But the number of workers continuing to receive unemployment benefits rose to 3.8 million for the work week ending April 20, evidence that people who are out of work are having trouble finding new jobs.

Economists predict that job growth won't be strong enough in the coming months to prevent the nation's unemployment rate -- now at 5.7 percent -- from rising.

Many economists are forecasting a rise in April's jobless rate to 5.8 percent and estimating that businesses added around 55,000 jobs during the month. The government will release the April employment report Friday.

Even as the economy bounces back from recession, some economists expect the jobless rate will peak to just over 6 percent by June. That's because companies will be reluctant to quickly hire back laid-off workers until they are assured the recovery is here to stay.

Given the fledgling rebound, many economists expect the Federal Reserve to leave short-term interest rates -- now at 40-year lows -- unchanged when it meets May 7. The Fed cut rates 11 times last year to rescue the economy from recession, which began in March 2001.

How the economic recovery ultimately shapes up will depend on the behavior of consumers and a turnaround in business investment spending, which dropped during the recession, Federal Reserve Chairman Alan Greenspan says.

Consumers kept buying throughout the slump, preventing the economy from sinking deeper into recession last year. As a result, there could be less pent-up demand coming out of the downturn, making for a less than sizzling rebound, the Fed chief warns.