The Labor Department says the drop in jobless benefits claims is a sign that employers are cutting fewer jobs.
New claims fell by 3,000 to a seasonally adjusted 450,000, the third decline in four weeks. Many economists had expected an increase.
Claims have fallen by 11 percent in the past month, after jumping to 504,000 in the week ending Aug. 14. That indicates layoffs are easing, even as the pace of economic growth has slowed since earlier this year.
The four-week average of new claims, which reduces volatility, dropped sharply to 464,750, down 13,500 from the previous week.
WHOLESALE PRICES
Wholesale prices rose last month for the second straight month as the cost of energy climbed enough to offset an unexpected drop in food prices.
The Labor Department says the Producer Price Index rose 0.4 percent in August after increasing 0.2 percent in July. The index measures price changes on products before they reach the consumer.
Excluding volatile food and energy costs, so-called ``core'' producer prices rose 0.1 percent for the 10th straight increase. Core prices have risen 1.3 percent in the past year.
Energy costs increased by the most since January. Most other price swings were small, suggesting that the economy remains too weak for suppliers to raise the prices they charge to retailers.
TRADE DEFICIT
Americans' stronger appetites for imported goods, especially cars and computers, lifted the broadest measure of the U.S. trade deficit in the second quarter to its highest point since late 2008.
The Commerce Department says the current account trade deficit grew to $123.3 billion in the April-to-June period, a 12.9 percent increase from the first quarter. It marked the fourth quarter in a row that the deficit had increased. That could be viewed as a healing sign for the U.S. economy as Americans slowly regain their appetite to spend.
Exports did rise in the quarter, but imports rose faster.
The current account is the broadest measure of trade because it tracks the flow of goods and services as well as investments between the United States and other countries.
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