New claims for US unemployment benefits fell unexpectedly last week to 457,000, down 2.4 percent from the previous week, the Labor Department said.
Jobless claims fell by 11,000 in the week ending July 24, down substantially from the 464,000 level expected by analysts.
The jobless figures were lower, in part, thanks to fewer layoffs at car plants in Michigan and New York.
"This was against our expectations for a gain," said Andrew Gledhill of Moody's Economy.com.
"We had expected recent troubles with seasonality related to fewer (auto) factory retooling shutdowns to bring more volatility."
But according to the figures, some 4,565,000 Americans still asked for government aid to get by in the week ending July 17, up 81,000 versus the previous week, according to seasonally adjusted statistics.
And the bleeding continued elsewhere, with California seeing 20,000 more claims. Labor Department economist said the rise came amid layoffs in the service industry.
"This is still a high reading for claims and is consistent with a still troubled labor market," said Gledhill.
But the report also showed that while unemployment levels remain stubbornly high, claims are substantially down from this time last year, when they hit 578,000.