Applications for U.S. state unemployment benefits retreated last week to the lowest in a month in a broad-based decline, pointing to ongoing improvement in the labor market.

Initial unemployment claims in regular state programs totaled 326,000 in the week ended Oct. 2, a decrease of 38,000 from the prior week, Labor Department data showed Thursday. The median estimate in a Bloomberg survey of economists called for a decrease to 348,000 applications.

Continuing claims for state benefits fell to 2.7 million in the week ended Sept. 25.

Layoffs have eased amid an improving economy, with employers now focused on hiring and retaining workers. And while the U.S. continues to recover jobs lost at the start of the pandemic, the massive snapback in demand has outpaced businesses’ ability to hire and strained already-mottled supply chains.

That’s led to production slowdowns and even temporary layoffs at some firms, fueling additional churn in the weekly initial claims figures.

Unadjusted initial claims in California dropped by more than 10,000, the most among the states. In recent weeks, a surge in unemployment applications in California has driven up the nationwide total, even as many other states reported fewer claims.

Applications also declined in Michigan, Texas and Washington, D.C.

Federal pandemic unemployment benefits ended by Sept. 6 in all states.

The monthly September employment report, out Friday, is projected to show nonfarm payrolls grew by half a million in the month. That would be double the number of jobs added in August. Data from ADP Research Institute Wednesday showed U.S. companies added more jobs than forecast in September.