The drop in continuing claims could signal a slowing in the rise of the unemployment rate, which reached a 25-year high of 9.4 percent in May. Many economists forecast the rate could reach 10 percent by the end of the year.
Still, millions of Americans are receiving unemployment compensation under an emergency federal program authorized by Congress last summer and extended by the Obama administration's stimulus package.
About 2.36 million people received benefits under that program in the week ending May 30, an increase of more than 102,000 from the previous week. That's in addition to the 6.7 million people receiving benefits under the 26-week program typically provided by states.
Economists also are closely watching the level of first-time claims for signs the economy will recover by mid-summer, as many analysts predict.
"If the labor market is indeed stabilizing, we should see a marked decline in new unemployment filings in the weeks ahead," economists at Wrightson ICAP wrote in a note to clients this week.
The four-week average of claims has dropped by about 40,000 from nearly 659,000 in early April, its peak for the current recession.
But many economists want to see it fall further. Bruce Kasman, chief economist at JPMorgan Chase & Co., said Tuesday that a drop in the four-week average to 580,000 by next month would be sufficient to declare the recession over.
Kasman is chairman of the American Bankers Association's economic advisory committee, a group of economists for large banks that this week predicted the economy will recover in the third quarter. The Federal Reserve also expects the economy to begin growing again this year.
First-time jobless claims are a measure of the pace of layoffs and are seen as a timely, if volatile, indicator of the economy's health. Initial claims stood at 390,000 a year ago.
Consumers and businesses have cut back on spending in response to the bursting of the housing bubble and the financial crisis, sending the economy into the longest recession since World War II. Companies have cut a net total of 6 million jobs since the downturn began in December 2007, in an effort to reduce costs.
Still, job cuts are slowing. The Labor Department said employers eliminated 345,000 positions in May, about half the monthly average of jobs lost in the first quarter.
More job cuts have been announced in the past week. MySpace, the social networking Web site owned by News Corp., said Tuesday it will cut nearly 30 percent of its work force, or about 420 jobs.
And Cessna Aircraft Co., the nation's largest builder of corporate jets, said Friday it will cut 1,300 jobs by August, on top of 6,900 layoffs that it previously announced.
Among the states, Pennsylvania reported the largest increase in initial claims for the week ending June 6. It attributed the increase of 6,861 claims to layoffs in the construction, service and transportation industries. The next largest increases were in Florida, Ohio, California and New York.
Arkansas had the largest decrease of 1,206, which it attributed to fewer layoffs in the auto industry. The next largest drops were in Puerto Rico, Wisconsin, Arizona and Nebraska.