WASHINGTON (AP) — The number of Americans seeking unemployment benefits fell sharply last week to a seasonally adjusted 346,000, signaling that the job market might be stronger than March's weak month of hiring suggested.

Applications for unemployment aid dropped 42,000 last week, the Labor Department said Thursday. The decline nearly reversed an increase over the previous three weeks. The four-week average, a less volatile measure, rose 3,000 to 358,000.

The number of unemployment applications has been volatile in the past two weeks largely because of the Easter holiday, a department spokesman said. The timing of the holiday changes from year to year. That makes it hard to adjust for school holidays and other changes that can cause temporary layoffs.

Applications had risen two weeks ago to 388,000, the highest level in four months. That spike "appears to have been a false alarm," Jim O'Sullivan, chief U.S. economist at High Frequency Economics, said in a note to clients.

"The report should assuage some of the concerns raised by last week's weaker-than-expected data, particularly payrolls."

Employers added only 88,000 jobs in March, the government said last week. That followed four months in which job growth averaged 220,000. Last week's drop in applications for unemployment aid could signal that hiring is picking up in April. O'Sullivan noted that the average is near its level for the first three months of the year, when job gains averaged 168,000 a month.

In March, the unemployment rate fell to a four-year low of 7.6 percent last month, down from 7.7 percent. But the rate fell only because more people stopped looking for work and were no longer counted as unemployed.

Applications are a proxy for layoffs. The decline in applications signals that companies are laying off fewer workers.

Nearly 5.28 million people were receiving unemployment aid in the week that ended March 23, the latest period for which figures are available. That's about 10,000 fewer than in the previous week.

Still, layoffs are only half the equation. Businesses also need to be confident enough in the economic outlook to add more jobs.

Companies are posting more open positions but have been slow to fill them. Their reluctance to hire suggests that they are still cautious about the economy.

The Labor Department reported earlier this week that companies advertised about 11 percent more job openings in February than in the same month a year earlier. But the number of people hired each month declined over that time.

Employment experts and staffing firms say many businesses have become highly selective and appear to be waiting for perfect candidates.

Much of the increase in net job gains earlier this year was a result of declining layoffs. Job cuts fell in January to the lowest level in the 12 years that the government has tracked the data.

Economists think economic growth accelerated in the January-March quarter to an annual rate of 3 percent. That would be a vast improvement over the annual rate of 0.4 percent in the October-December, which was held back by steep defense cuts and slower restocking by companies.

One concern is that across-the-board government spending cuts that began on March 1 will shave a half-percentage point from growth this year. That may have also made businesses cautious about hiring last month.