The number of Americans filing initial claims for unemployment benefits fell sharply last week.

Jobless claims fell 10,000 to a seasonally adjusted 204,000 for the week ended January 10. Economists had expected a small rise from 214,000 to 215,000.

The four-week moving average, which smooths out week-to-week volatility and is considered by many to be a more reliable indicator of economic conditions, fell to 216,250, a decrease of 7,750 from the previous week.

Because jobless claims are a proxy for layoffs, they have been closely watched for signs that economic conditions are weakening the labor market. The low levels of claims, as well as very low unemployment, indicates that U.S. businesses are reluctant to let workers go. The tight labor market is likely to continue to support consumer spending, a crucial element of economic growth.