New U.S. claims for jobless benefits hit a seven-month low last week, while permits for future home construction rebounded strongly last month, bolstering views the economy was gaining traction.

Initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 388,000, the Labor Department said on Thursday, from 393,000 the prior week. Economists had forecast claims rising to 395,000.

Separately, permits for residential construction rose 10.9 percent to a seasonally adjusted annual rate of 653,000 last month, the Commerce Department said. However, new home construction fell 0.3 percent to annual rate of 628,000 units.

U.S. stock index futures edged higher on the claims data, while prices for Treasury debt fell. The dollar fell against the euro.

The U.S. economy continues to show signs of strong momentum. The improvement in claims underscores that the gains in labor market activity over the past few months are being sustained, said Millan Mulraine, a senior macro strategist at TD Securities in New York.

The claims data covered the survey period for November's nonfarm payrolls. Claims dropped 16,000 between the October and November survey weeks, implying an improvement in nonfarm employment.

After wobbling in the second quarter, the labor market is regaining momentum, but not enough to cut into a 9 percent unemployment rate and promote faster economic growth.

The unexpected decline in claims last week was the latest sign that the economy maintained speed in the fourth quarter, further reducing the risk of a new recession.

Recent data such as retail sales and industrial production point to firming growth. Economists believe fourth-quarter growth could top an annual pace of 3 percent, stepping up from 2.5 percent in the July-September period.

But the crisis in Europe, which has caused bond market turmoil across the region, could derail the recovery.

A Labor Department official described the claims report as straightforward.

Initial claims have now held below the 400,000 mark that is normally associated with some healing in the jobs market for a second straight week.

The four-week moving average of claims, considered a better measure of labor market trends, fell 4,000 to 396,750 -- the lowest since April.

The number of people still receiving benefits under regular state programs after an initial week of aid dropped 57,000 to 3.61 million in the week ended November 5

Economists forecast so-called continuing claims rising to 3.64 million from a previously reported 3.62 million.

The number of Americans on emergency unemployment benefits slipped 18,358 to 2.94 million in the week ended October 29, the latest week for which data is available.

A total of 6.77 million people were claiming unemployment benefits during that period under all programs, down 62,278 from the prior week.

(Reporting by Lucia Mutikani and Jason Lange, Editing by Andrea Ricci)