WASHINGTON (February 7, 2013)--Fewer Americans sought unemployment benefits last week, which indicates companies continue to hire at a modest but steady pace, the U.S. Labor Department said Thursday.

The Labor Department said weekly applications for unemployment benefits fell 5,000 to a seasonally adjusted 366,000.

The four-week average, which is a less volatile measure, dropped to 350,500, the lowest in nearly five years.

The average is low because of seasonal factors, which reduced applications sharply last month.

Weekly applications are a proxy for layoffs.

When layoffs decline, net hiring typically rises.

The four-week average of applications has dropped nearly 6 percent in the past three months.

At the same time, hiring has picked up.

Employers added an average of 200,000 jobs a month from November through January.