The number of Americans filing new claims for unemployment benefits fell more than expected last week, in the latest sign of tightening labor market conditions.
Other data on Thursday showed productivity growth slowed in the third quarter while compensation is steadily increasing without creating inflation pressures or weighing on profits.
Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 278,000 for the week ended Nov. 1, the Labor Department said.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell to its lowest level since April 2000.
"Companies appear increasingly unwilling to layoff labor, which speaks not only to the state of the economy but also, perhaps, to the difficulty in hiring replacement workers," said John Ryding, chief economist at RDQ Economics in New York. Economists polled by Reuters had forecast claims dipping to 285,000 last week. Claims have now been below the 300,000 threshold for eight straight weeks, suggesting that employment growth was gaining momentum.
The dollar extended gains versus the yen after the data, while prices for U.S. Treasury debt dipped.
A report on Wednesday showed private payrolls increased 230,000 in October, for a record seven straight months of job gains exceeding 200,000.
The government is expected to report on Friday that nonfarm payrolls advanced 231,000 last month after rising 248,000 in September, according to a Reuters survey of economists. The jobless rate is seen steady at a six-year low of 5.9 percent.
The Federal Reserve last month gave an upbeat view of the labor market, dropping its characterization of labor market slack as "significant" and replacing it with "gradually diminishing."
In a second report, the Labor Department said productivity - which measures hourly output per worker - grew at a 2.0 percent annual rate in the third quarter after expanding at an upwardly revised 2.9 percent pace in the second quarter.
While unit labor costs, the price of labor for any given unit of production, rose at a 0.3 percent rate in the third quarter after declining at a 0.5 percent pace, pay is accelerating, a good sign for the economy.
Compensation per hour increased at a 2.3 percent rate in the third quarter after a similar rise in the prior quarter.
Hourly compensation was up 3.3 percent from a year earlier, the fastest increase since the fourth quarter of 2012.
The Fed is watching wage growth as it ponders when to raise its benchmark interest rate, which it has kept near zero since December 2008. The U.S. central bank ended its bond buying program last month.
The increase in compensation adds to other signs of a pickup in wages. A broad wage measure, the employment cost index, recorded its biggest gain since 2008 in the third quarter. Wage growth has been the missing part in the labor market recovery.
The claims report showed the number of people still receiving benefits after an initial week of aid declined in the week ended Oct. 25 to its lowest level since December 2000.
(Reporting By Lucia Mutikani; Editing by Andrea Ricci)