New claims for unemployment insurance fell for the second straight week, suggesting the economic recovery is motivating some companies to lay off fewer workers.

For the week ending, May 25, new claims dropped by a seasonally adjusted 12,000 to 410,000, the lowest level since March 16, the Labor Department reported Thursday. Claims fell by 3,000 the week before.

The more stable four-week moving average of new claims, which smoothes out weekly fluctuations, also fell last week to 418,500.

Although fewer Americans filed new applications, the level of claims continues to be high, a sign that the jobs market remains sluggish.

Even if companies reduce the speed at which they lay off workers, the jobless rate will keep rising if companies are reluctant to hire employees back.

The nation's unemployment rate jumped to 6 percent in April — the highest in nearly eight years — as jobseekers streamed back into the market faster than companies added new positions.

Many economists predict the unemployment rate will rise as high as 6.5 percent by June.

Companies — whose revenues and profits took a hit during the slump — are worried about the recovery's staying power and are reluctant to quickly hire back workers, crank up spending and make other big commitments until they are convinced the turnaround is for real, economists said.

Thursday's report also showed that the number of unemployed workers continuing to draw jobless benefits rose to 3.89 million for the week ending May 18. That was the highest level since Jan. 15, 1983.

That suggests that laid-off workers are still having trouble finding a job.

Citing uncertainties about the vitality of the unfolding economic recovery, the Federal Reserve earlier this month decided to leave short-term interest rates unchanged at 40-year lows.

The specter of rising unemployment, along with the belief that consumers — who kept buying throughout last year's recession, won't have a lot of pent-up demand coming out of it — were factors in the Fed policy-makers' decision to hold rates steady. Many economists predict the Fed will leave rates unchanged through the summer.

Low rates might motivate consumers, whose spending accounts for two-thirds of all economic activity in the United States, to keep on spending and businesses to step up investment, thus helping along the recovery.