The U.S. economy continues to struggle its way into a sustainable recovery. A double-dip recession is still a possibility, and that is viewed as the biggest threat to Canadian growth as well.

The traditional driver of the American economy is the consumer, but unemployment remains stubbornly high.

There was s spot of good news on Thursday, as fewer Americans applied for unemployment benefits last week, suggesting layoffs are slowing and there may even be some hiring.

The U.S. Labor Department reported a drop of 5,000 applicants, to a seasonally adjusted 382,000 in the week ended March 19. The number of applications has fallen in four of the past five weeks.

The four-week average fell to 385,250, the lowest since July 2008. Unemployment applications have dropped steadily since late January, with the four-week average falling almost 11% in the past seven weeks.

“Both initial and continuing jobless claims continue to indicate further labor market improvement, consistent with our view that employment growth will pick up through 2011,” writes Barclays Capital analyst Nicholas Tenev.

Applications need to fall consistently to about 375,000 or below to indicate a sustained increase in hiring. Applications peaked during the recession at 651,000. Weekly applications for unemployment benefits are considered a gauge of the pace of layoffs.

The U.S. workforce is far from out of the woods yet, though. There are still over 3.7 million Americans receiving unemployment benefits.