WASHINGTON - First-time claims for unemployment benefits fell to 350,000 for the week that ended Dec. 22, down 12,000 from the previous week's revised figure of 362,000, the Labor Department said Thursday.

That's the lowest figure since March 2008.

The four-week moving average was 356,750, down 11,250 from the previous revised average of 368,000.

But the figures were affected by the Christmas holiday. A department spokesman said many state unemployment offices were closed Monday and Tuesday and unable to compile complete data. Fourteen states provided estimates and the department estimated the numbers for five more states.

The government might estimate one or two states in a typical week, but 19 state estimates are unusually high.

Weekly applications are a proxy for layoffs. They have mostly fluctuated this year between 360,000 and 390,000. At the same time, employers have added an average of 151,000 jobs a month in the first 11 months of 2012. That's just enough to slowly reduce the unemployment rate.

The recent decline in unemployment benefit applications suggests companies are not yet slashing jobs because of concerns over the so-called "fiscal cliff." That's the name for sharp tax increases and spending cuts that are scheduled to take effect next week unless the President Barack Obama's administration and Congress can reach a deal before then.

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Still, unemployment remains high and companies are reluctant to increase hiring. The unemployment rate fell to 7.7% in November from 7.9% in October mostly because many unemployed people stopped looking for jobs. The government counts people as unemployed only if they are actively searching for work.

Negotiations between Obama and House Republican leaders on a package to avoid the fiscal cliff stalemated last week. Obama and congressional lawmakers returned to Washington Thursday with just days to go before the deadline.

There are signs the economy is improving. The once-battered housing market is recovering, which should lead to more construction jobs in the coming months. Companies ordered more long-lasting manufactured goods in November, a sign they are investing more in equipment and software. And Americans spent more in November. Consumer spending drives nearly 70% of economic growth.

While a short fall over the cliff won't push the economy into recession, most economists expect some tax increases to take effect in 2013. That could slow growth.

Consumers are starting to worry about higher taxes. A measure of consumer confidence fell to a five-month low in December, a survey released Friday found. And reports show the holiday shopping season was the weakest since 2008, when the country was in a deep recession.