For the third time in the past four weeks, fewer people applied for unemployment benefits -- a sign the job market is slowly improving.

The Labor Department announced Thursday weekly claims for jobless aid dropped by 3,000 to a seasonally adjusted 420,000 in the week that ended December 11.

Claims have been steadily declining in the past two months, raising hopes among economists that layoffs are falling and employers are hiring more workers.

"The trend is unmistakably better and this echoes good news from other leading indicators," Jonathan Basile, an economist at Credit Suisse, wrote in a note to clients.

Meanwhile, home construction rose in November after two months of decline.

The Commerce Department said builders broke ground last month on a seasonally adjusted 555,000 units, a 3.9 percent rise from October.

The reports cap a strong week for the economy that has many thinking 2011 will be a better year than first thought. Factories are producing more, retail sales are rising, and business executives and consumers are increasingly optimistic. And Congress is on the cusp of passing a package of tax cuts and an extension of emergency unemployment benefits that would give businesses and consumers more money to spend next year.