Initial claims for state unemployment benefits dropped 29,000 to a seasonally adjusted 429,000 last week, the lowest since late August 2008, the Labor Department said.
Analysts polled by Reuters had expected claims to fall to 450,000 from the previously reported 454,000, which was revised up to 458,000 in Thursday's report.
The four-week moving average of new jobless claims, considered a better measure of underlying labor market trends, fell 11,750 to 455,250.
