American's seeking unemployment benefits dropped by 35,000 last week, to 353,000, the Department of Labor announced Thursday, representing the biggest drop inapplications for first-time jobless benefits since February.

The previous week saw 388,000 claims. The four-week adjusted average declined 8,750 to 367,250, the lowest level since March.

Part of the reason for the less-than-expected decline of 380,000 was that the auto industry kept running factories that would have normally closed during the annual summer season lull. However, this year saw an uptick in car purchases that kept some facilities open, or closed for a shorter time.

"In recent weeks the Labor Department has reported that the timing of the annual auto retooling is at odds with what the seasonal factors had expected," said Michael Gapen, an economist for Barlcay Research in his research notes.

"We therefore suggest reading the week-to-week changes in the headline claims data with a pinch of salt for the time being. We continue to believe the four-week moving average is a better indicator of conditions in the labor market and by that measure we suggest there is some reason for optimism in this report.