WASHINGTON (AP) -- The number of Americans seeking unemployment benefits dropped 12,000 last week to a seasonally adjusted 334,000, a decline that suggests steady job gains will endure.

The less volatile four-week average decreased 7,250 to 345,250, the Labor Department said Thursday. Both figures are roughly 7,000 higher than month-ago levels, which were the lowest in five years.

Applications are a proxy for layoffs. Since January, they fallen 6.5 percent, suggesting employers are cutting fewer jobs.

At the same time, hiring has been steady. Employers added 175,000 jobs in May, the department said last week. That nearly matched the monthly average for the previous year. The unemployment rate ticked up to 7.6 percent, but for a good reason: More Americans were confident they could find work and began searching for a job.

Separately, the Commerce Department said that retail sales rose 0.6 percent in May from April. The gain shows consumers remain resilient despite higher taxes and could drive faster growth later this year.

Economists were encouraged by both reports.

"The retail sales result is a plus, no question," said Jennifer Lee, an economist at BMO Capital Markets. "And the improving trend in jobless claims is supportive for future spending."

About 4.5 million people received unemployment benefits in the week that ended May 25, the latest data available. That's 130,000 fewer than the previous week. The number of people receiving benefits has fallen 29 percent in the past year. Some of those recipients have likely gotten jobs, but many have probably used up all the benefits available to them.

The economy grew at a solid annual rate of 2.4 percent in the first three months of the year. Consumer spending rose at the fastest pace in more than two years.

Economists worry that federal spending cuts and higher Social Security taxes, which started Jan. 1, might be slowing growth in the April-June quarter to an annual rate of 2 percent or less. But the gain in retail spending and declines in unemployment benefit applications show the economy may be stronger than some anticipated.

The department said earlier this week that more Americans quit their jobs in April compared with March. That's a sign of confidence in the job market, since most workers don't quit until they have another job or are sure they can find one. More people quitting jobs also opens up jobs for other workers, or the unemployed, to take.

Overall hiring also picked up in April, the department said, as part of its Job Openings and Labor Turnover survey. Top officials at the Federal Reserve have said they are looking at the level of quits and overall hiring as part of their efforts to gauge the health of the job market.

On Wednesday, a survey of chief executives at the largest U.S. companies showed that they are more optimistic about sales in the next six months and plan to add more workers.

The Business Roundtable said its April-June quarterly survey found 32 percent of its members expect to expand payrolls in the next six months. That's up from 29 percent in the January-March survey. And 78 percent expect their sales to increase. That's up from 72 percent from the previous survey.

Small business owners are also a bit more optimistic, according to a separate survey by the National Federation of Independent Business, released Tuesday.