U.S. workers' wages and benefits grew by 1 percent in the second quarter, the fastest pace in six months, as the unfolding economic recovery helped companies to offer more generous compensation packages 

The Labor Department reported Thursday that the increase in the April-June quarter in its employment cost index followed a 0.8 percent advance in the first three months of this year. 

The 1 percent advance in the second quarter was slightly bigger than many analysts expected and represented the largest increase in total compensation since the fourth quarter of 2001. 

In another report, the Commerce Department said that orders to U.S. factories for big-ticket goods dropped by 3.8 percent from May to June, a much weaker performance than many analysts were expecting. They were forecasting a 0.5 percent increase. 

The drop was the largest since November. 

June's decline came after durable good orders — items expected to last at least three years — rose by 0.6 percent in May. 

Separately, new claims for unemployment insurance fell sharply for the second week in a row, dropping to their lowest level in 17 months. The figures offered an encouraging sign that the pace of layoffs is stabilizing. 

Last week claims fell by a seasonally adjusted 21,000, to 362,000. That pushed claims to their lowest point since Feb. 17, 2001. The week before, claims declined by 24,000. 

Still, Thomas Stengle, a statistician with the Labor Department, cautioned against reading too much into the declines because claims figures tend to bounce around a lot this time of year. Auto plants temporarily shut down to report for new models this time of year. 

Not only that, difficulties in adjusting for these seasonal factors can distort the numbers. 

The more stable four-week moving average of claims went down to 384,500, the lowest level since early March. The moving average has been below the 400,000 mark — a level associated with weakness in the job market — for six straight weeks. 

The number of people continuing to draw jobless benefits dipped to 3.5 million for the work week ending July 13, the most recent period the information is available. That was the lowest level since Feb. 23. 

In the compensation report, the costs of benefits — such as health insurance and vacations — continued to outpace wage gains. 

Benefit costs rose 1.3 percent in the second quarter, the strongest pace since the third quarter of 2001. In the first quarter, benefit costs were up by 1 percent. 

The wages and salaries component of the index, viewed by economists as the best measure of changes in workers' compensation, grew by 1 percent in the second quarter, the largest increase in a year. 

For the 12 months ending June, total compensation grew by 4 percent. That was led by a 5 percent rise in benefit costs and a 3.5 percent increase in wages and salaries.