Applications for jobless benefits in the U.S. fell sharply for the week ended Dec. 25, recording a decline for four consecutive weeks.

Initial jobless claims in the U.S. fell 34,000 to 388,000 compared with revised figure of 422,000 in the previous week, the Labor Department said on Thursday.

Markets had expected the claimant count to fall to 416,000.

Also, the seasonally adjusted 4-week moving average of initial claims -- considered as a more accurate measure of employment trends than the weekly number -- decreased by 37,250 to 4,120,000.

However, the unemployment rate among people eligible for benefits increased by 0.1 percent to 3.3 percent in the week ended Dec. 18.

While California witnessed the largest drop in claims at 7,656, New Jersey saw largest increase with an additional 5,235 people filing for employment benefits.

Overall, the number of people receiving jobless allowance from state and federal governments stood at 8.86 million in the week ended Dec. 11, down 35,354 from the prior week.