WASHINGTON - March 3, 2011 - New applications for U.S. jobless benefits fell by 20,000 to 368,000 in the week of February 26, the lowest level in nearly three years, the Labor Department reported Thursday.

The last time claims were that low was in May 2008.

Economists polled by MarketWatch had expected first-time jobless claims to rise to a seasonally adjusted 398,000 from last week's revised level of 388,000.

Over the past four weeks, claims have averaged 388,500, marking the lowest one-month average since July 2008, according to government data. The four-week average is considered a more accurate gauge of employment trends because it lessens week-to-week volatility in the data.

The decline in claims, which have fallen 27% since last August, appears to be consistent with a modest pace of hiring and fewer layoffs. Meanwhile, continuing claims declined by 59,000 to 3.77 million in the week of February 19. About 9.24 million people received some kind of state or federal benefit in the week of February 12, up 74,000 from the week before.