WASHINGTON (AP) – The number of people seeking U.S. unemployment aid dropped sharply last week, the latest sign that businesses are cutting few jobs.

The Labor Department says weekly applications for jobless benefits fell 12,000 to a seasonally adjusted 260,000, not far from the lowest levels in four decades.

Applications are a proxy for layoffs. The four week average, a less volatile measure, was unchanged at 271,000.

Businesses are holding onto their staffs and adding jobs at a solid pace as steady consumer spending has bolstered the economy. The strong dollar and slower overseas growth have reduced corporate profits but so far there is no sign companies are responding by cutting workers.

Hiring actually rose to its strongest level this year in October, as employers added 271,000 jobs.