The number of Americans filing new applications for jobless benefits declined last week as layoffs remained low, helping to allay fears that the labor market was deteriorating.

The weekly jobless claims report from the Labour Department on Thursday, the most timely data on the economy's health, also showed unemployment rolls shrinking to levels last seen in mid-June. It reduces the urgency for the Federal Reserve to deliver a 50 basis points interest rate cut this month.

A step-down in hiring, which pushed the unemployment rate to a near three-year high of 4.3 per cent in July rattled investors and fanned concerns that a recession was stalking the economy