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The number of people seeking Utah unemployment benefits dropped last week to a three-and-a-half-year low, a strong hint that the state's jobless levels are returning to pre-recession conditions.

First-time applications fell by 80, to 1,572 — the lowest level since September 2008, when the recession was less than a year old and unemployment was rising, according to figures released Thursday by the Utah Department of Workforce Services.

There was a note of caution in the numbers, though. The four-week average, which smooths out weekly volatility in the numbers, also fell, but remained above the weekly count. The average declined by 31 applications to 1,786, the smallest number in the past six months.

Still, the numbers bode well for Utah's slowly healing economy, said Mark Knold, the department's chief economist.

"These numbers are starting to get close to the amount of layoffs you saw on a weekly basis when the economy was good," Knold said. "What these numbers are implying is that the amount of layoffs that occurred during the recessionary setback is ending. These levels are getting to a point where you can almost close the book on that."

Knold expects new claims to fall further in coming weeks. But he isn't certain that the worst period of layoffs to rock Utah since the 1930s is completely over.

"I'd like to see a few more weeks of this to put a little oomph in what I've said."

Nationally, claims for unemployment benefits also dropped last week.

The Labor Department says weekly unemployment benefit applications fell 5,000, to a seasonally adjusted 359,000. That's the smallest number of applicants since April 2008. The four-week average declined to 365,000.

The department also made its annual revisions to the past five years of unemployment benefit data. The revisions significantly increased the number of unemployment benefit applicants in recent months. But the downward trend remains intact.

When unemployment benefit applications drop consistently below 375,000, it usually signals that hiring is strong enough to lower the unemployment rate. The decline has coincided with the best three months of hiring in two years.

From December through February, employers added an average of 245,000 jobs per month. That has pushed down the unemployment rate to 8.3 percent, the lowest in three years.

Companies are hiring more because the economy appears to be picking up. The economy grew at an annual rate of 3 percent in the final three months of last year. That was better than the 1.8 percent rate in the previous quarter.

One concern is that rising gas prices will force consumers to cut back on discretionary spending. That could weigh on economic growth and slow hiring. The Federal Reserve says it expects oil and gas prices to temporarily boost inflation but predicts that longer-term inflation should remain stable.

The Associated Press contributed to this story.

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