Still, unemployment remains high and companies are reluctant to ramp up hiring. The unemployment rate fell to 7.7 percent in November from 7.9 percent in October mostly because many of the unemployed stopped looking for jobs. The government counts people as unemployed only if they are actively searching for work.
Negotiations between President Obama and House Republican leaders on a package to avoid the fiscal cliff stalemated last week. Obama and congressional lawmakers return to Washington on Thursday with just days to go before the deadline.
The total number of people receiving benefits rose 73,000 to 5.48 million in the week ended Dec. 8, the latest data available.
That includes about 2.1 million people who have been out of work for at least six months and are receiving extended benefits paid for by the federal government. The program is ending at the end of the year. That means those recipients will receive their final checks next week, unless an extension is granted.
Obama wants an extension included in the budget deal. Republicans have yet to agree to that.
There are signs the economy is improving. The once-battered housing market is recovering, which should lead to more construction jobs in the coming months. Companies ordered more long-lasting manufactured goods in November, a sign they are investing more in equipment and software. And Americans spent more in November. Consumer spending drives nearly 70 percent of economic growth.
While a short fall over the cliff won't push the economy into recession, most economists expect some tax increases to take effect next year. That could slow growth.
Consumers are starting to worry about higher taxes. A measure of consumer confidence fell to a five-month low this month, a survey released Friday found. And reports show the holiday shopping season was the weakest since 2008, when the country was in a deep recession.