First-time jobless claims dropped 10,000 to a three-week low of 278,000 in the week ended Nov. 1, the Labor Department reported today in Washington. The median forecast of 50 economists surveyed by Bloomberg called for 285,000. The four- week moving average, a less-volatile measure of job cuts, reached the lowest level in more than 14 years.

Cutbacks in dismissals and increased hiring are sustaining household purchases, which account for 70 percent of the world's largest economy. Wages that have been slow to pick up remain a headwind for bigger spending gains that would make it easier for the expansion to accelerate.

"The labor market continues to strengthen," said Ward McCarthy, chief financial economist at Jefferies LLC in New York. "It's going to continue to gain momentum, but so far the supply-and-demand dynamics in the labor market have not translated into gains in wages."