The number of applications for unemployment benefits unexpectedly dropped last week to the lowest level in three years, showing the U.S. labor market is healing.

Jobless claims dropped by 19,000 to 366,000 in the week ended Dec. 10, the fewest since May 2008, Labor Department figures showed today in Washington. The median forecast of 47 economists surveyed by Bloomberg News projected 390,000.

Slowing dismissals pave the way for an increase in employment that may help spur consumer spending, which accounts for about 70 percent of the economy, during the holiday shopping season. Nonetheless, the threat of a recession in Europe brought on by its sovereign debt crisis, and political wrangling over the U.S. budget, is restraining companies from expanding staff.

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