New U.S. claims for unemployment benefits dropped more than expected last week to touch their lowest level in more than two years, suggesting the labor market recovery was gaining strength.

Initial claims for state unemployment benefits fell 34,000 to a seasonally adjusted 388,000, the lowest reading since early July 2008, the Labor Department said Thursday. That was well below economists’ expectations for 415,000.

The prior week’s claims figure was revised modestly up to 422,000 from the previously reported 420,000. A Labor Department official said there was nothing unusual in the state-level data and described the report as clean.