New figures released Thursday show that jobless claims have dropped below 400,000, the lowest reading since July 2008.

Claims for unemployment benefits fell by 34,000 last week and are now down to a seasonally adjusted 388,000. That's lower than the 415,000 economists had expected.

"We need to see more evidence over the next few weeks, particularly in the early part of 2011, to know that this is a real downside breakout and fewer people are getting laid off," said Stuart Hoffman, chief economist with PNC Financial Services.

While the latest figure show signs of a slightly improving job market, the news is not all good. More than 4.5 million Americans are still collecting weekly unemployment insurance.

There was some good news for California, which has one of the highest unemployment rates in the country.  The number of unemployment claims in the state ending the week of December 18 dropped by 7,656, according to ABC News, citing fewer layoffs in the agriculture industry as the reason for the decline.

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