New claims for unemployment benefits rose slightly last week but held below 400,000 for the third straight week, suggesting the labor market was gaining traction.

Initial claims for state unemployment benefits climbed to a seasonally adjusted 393,000 from an upwardly revised 391,000 in the prior week, the Labor Department said on Wednesday.

Economists polled by Reuters had forecast claims at 390,000.

The U.S. economy has gathered steam in the second half of the year, expanding at a 2 percent annual rate in the third quarter. It could accelerate in the fourth quarter.

That could help the country avoid a recession, which is expected in the euro zone. But economists still see a risk of a U.S. recession next year, especially if lawmakers allow extended unemployment benefits and a payroll tax cut to expire at the end of 2011.

A Labor Department official described the jobless claims report as straightforward, with no states estimating their level of claims.

Initial claims below the 400,000 mark are normally seen as pointing to some healing in the jobs market.

The four-week moving average of claims, considered a better measure of labor market trends, fell 3,250 to 394,250, the lowest since April.

The number of people still receiving benefits under regular state programs after an initial week of aid rose 68,000 to 3.69 million in the week that ended November 12.

Economists had forecast so-called continuing claims falling to 3.605 million from a previously reported 3.608 million.

A total of 6.73 million people claimed unemployment benefits under all programs during the week ending Nov 5, down 44,608 from the prior week.

(Reporting by Jason Lange; editing by Chizu Nomiyama and Jeffrey Benkoe)

Unemployment