By Ben Leubsdorf

The U.S. job market ended the year on solid footing as an important indicator of layoffs continued to hover near historically low levels.

The Labor Department on Thursday reported that applications for new unemployment benefits decreased by 10,000 to a seasonally adjusted 265,000 in the week ended Dec. 24, matching economists' expectations and partially reversing a jump in the prior week.

Even accounting for short-term volatility, which can be especially pronounced around holidays, the trend appears healthy. Initial jobless claims have now hovered below 300,000 for 95 consecutive weeks, the longest such streak since 1970 -- when the U.S. workforce and population were far smaller than they are today."On the whole, we continue to expect further improvement in labor market conditions," Barclays economist Michael Gapen said.

Economic conditions vary widely, though, from region to region. In a separate report, the Labor Department said unemployment rates across U.S. metro areas ranged in November from a low of 1.7% in Ames, Iowa, to a high of 20.3% in El Centro, Calif.

Among large metro areas, jobless rates ranged from 2.4% in Boston and Salt Lake City to 5.5% in Riverside-San Bernardino-Ontario, Calif.

The metro-level data weren't adjusted for seasonal variations.

At the national level, the U.S. labor market posted solid gains in 2016. The unemployment rate in November was 4.6%, its lowest level since August 2007. Growth in nonfarm payrolls averaged 180,000 a month during the first 11 months of the year, a solid pace of job creation, though a step down from 2015's monthly average of 229,000.

The Labor Department next week will release payroll and unemployment data for December.

The broader U.S. economy remained on track for steady, though unspectacular, growth as 2016 drew to a close. After a weak start to the year, gross domestic product, a broad measure of the goods and services produced across the economy, expanded at an inflation- and seasonally adjusted rate of 3.5% in the third quarter. That was the strongest growth rate in two years.

But many forecasters expect somewhat slower growth in the final three months of 2016.

The Commerce Department on Thursday reported the U.S. trade deficit in goods widened 5.5% in November from the prior month, reflecting a drop in exports and rising imports. A surge in soybean exports had helped boost overall output in the third quarter, but a wider trade gap could act as a drag on GDP growth in the fourth quarter.

The agency also reported that retail inventories jumped 1.0% from October while wholesale inventories increased 0.9% in November, a buildup that could help bolster GDP growth.

Forecasting firm Macroeconomic Advisers on Thursday raised its estimate for fourth-quarter GDP growth to 2.1% from 1.7%. Other forecasters were less optimistic about Thursday's data; Stephen Stanley, chief economist at Amherst Pierpont Securities, lowered his estimate for the fourth-quarter's GDP growth rate to 1.8% from 2%.

The Commerce Department will release its first official estimate for fourth-quarter GDP on Jan. 27.

Continued growth, alongside low unemployment and signs of firming inflation, would likely reinforce the Federal Reserve's plan to gradually raise short-term interest rates. The U.S. central bank in mid-December raised its benchmark federal-funds rate for just the second time since the financial crisis, and policy makers penciled in three quarter-point rate increases in 2017.

"We have a strong labor market,and we have a resilient economy," Fed Chairwoman Janet Yellen said, describing the decision to raise rates as "a reflection of the confidence we have in the progress the economy has made and our judgment that that progress will continue."

Write to Ben Leubsdorf at ben.leubsdorf@wsj.com

(END) Dow Jones Newswires

December 29, 2016 14:23 ET (19:23 GMT)

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