WASHINGTON—The number of U.S. workers filing new claims for jobless benefits slid last week to the lowest level in nearly two and a half years, indicating that labor-market conditions continue to improve.

Initial unemployment claims declined by 34,000 to 388,000 in the week ended Dec. 25, the first time the figure has dropped below 400,000 since July 2008, the Labor Department said Thursday in its weekly report. The previous week’s figures were revised up slightly to 422,000 from 420,000.

Economists surveyed by Dow Jones Newswires had expected claims would fall by just 2,000.

The four-week average of new claims, which aims to smooth volatility in the data, also fell to its lowest point since July 2008. That more closely watched figure decreased by 12,500 to 414,000.

While seasonal layoffs often pick up in the week before Christmas, a Labor Department economist said there is nothing unusual about the figures reported by individual states.

The ongoing decline in initial claims provides some basis for optimism about the labor market following a disappointing monthly employment report for November. The positive weekly figures suggest the December jobless report, due for release Jan. 7, could show a decline in the unemployment rate from the seven-month high of 9.8% reached last month.

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