Fewer people applied for unemployment aid last week, the third drop in four weeks and evidence that the job market is showing signs of life.
If the decline continues, it could signal more hiring in the near future. The report comes after the Labor Department said last week that private employers added the most jobs in six months in October.
The Labor Department said Wednesday that initial claims for jobless aid dropped by 24,000 to a seasonally adjusted 435,000. Many Wall Street economists expected a smaller decrease.
The four-week average of claims, a less volatile measure, fell 10,000 to 446,500. That’s the lowest level for the average since the week that ended Sept. 13, 2008, just before the financial crisis intensified that weekend with the collapse of Lehman Brothers.
It’s only the second time the four-week average has fallen below 450,000 this year. The first time was in March, just before a large spurt of hiring in April.
“The pace of hiring has picked up in the past few months,” said Mark Vitner, an economist at Wells Fargo. If the drop in claims is sustained, he said, net job gains could rise from this year’s average of 90,000 a month to 140,000 next year.
Still, that’s barely enough to keep up with population growth. The economy needs to create at least 300,000 net jobs a month to make a dent in the unemployment rate, now at 9.6 percent.
Separately, the trade deficit narrowed in September by 5.3 percent to $44 billion in September, as imports retreated slightly while exports edged higher.
Weekly first-time claims are now at their lowest level since early July, when they were temporarily lowered by the July 4 holiday. Last week’s figures are the second-lowest this year.
Applications fell partly because the weather has been relatively warm so far this fall, a Labor Department analyst said, and construction and manufacturing firms haven’t temporarily laid off as many workers due to cold weather as they have in the past.
Claims have previously dropped sharply this year, but have always bounced back. Applications have fluctuated around 450,000 for most of this year, after falling last year from about 600,000 when the recession ended in June 2009. Economists say claims need to drop below 425,000 to signal a healthy pace of hiring.
Applications for unemployment benefits, while volatile, provide a real-time snapshot of the job market. They are a measure of the pace of layoffs and signal whether companies are adding jobs.
Some companies are hiring new workers, despite the slow economy. US Airways said Monday that it plans to hire 500 flight attendants and pilots next year, mostly to cover planned retirements and attrition. The jobs will initially be offered to former employees laid off during the downturn.
Source: The Associated Press.