AAP

The US economy grew at a 3.5 per cent pace in the third quarter, the best showing in two years, fuelled by government-supported spending on cars and homes. It was the strongest signal yet the economy entered a new phase of recovery and that the worst recession since the 1930s has ended.

The government says the number of people claiming jobless benefits for the first time droppped slightly last week, evidence that the labour market remains weak even as the economy is recovering.

The Labour Department said Thursday its tally of newly laid-off workers seeking unemployment insurance fell by 1,000 to a seasonally-adjusted 530,000 last week. Analysts expected a steeper drop to 521,000.

Still, the four-week average, which smoothes out volatility, fell for the eighth straight week to 526,250, its lowest level since early January. Claims are slowly declining as companies lay off fewer workers.

The number of people continuing to claim benefits, meanwhile, has dropped sharply by 148,000 to 5.8 million, below analysts' expectations.