New claims for unemployment insurance fell last week to their lowest level in eight months, a hopeful sign that companies may be having a bit more faith in the staying power of the economic recovery and thus are easing the pace of layoffs.
The Labour Department reported Thursday that for the work week ending Oct. 4 new applications for jobless benefits dropped by a seasonally adjusted 23,000 to 382,000, the best showing since Feb. 8. That marked a better performance than analysts were forecasting. They were predicting claims would dip to 395,000 last week.
New claims hit a high this year of 459,000 in the middle of April. With claims last week dipping below 400,000, a level associated with a sluggish labour market. Economists are encouraged that the pace of firings may now be stabilizing.
The more stable, four-week moving average of new claims, which smoothes out weekly fluctuations, declined by 11,500 last week to 393,500, also the lowest level since Feb. 8.
The number of unemployed people collecting jobless benefits for more than a week also went down by 7,000 — to 3.6 million for the week ending Sept. 27, the most recent period for which that information is available.
Hopeful signs on the labour market front come as the economy, which grew at a annual rate of 3.3 per cent in the April-to-June quarter of this year, is believed to have picked up more speed and grown at a rate of around 5 per cent in the July-to-September quarter, economists said.
For the first time in eight months, the economy actually added jobs in September — 57,000 of them — helping to keep the nation's unemployment rate at 6.1 per cent, the government reported last week.
While that employment report offered hope that job seekers may be seeing better days ahead, economists said steady improvement in the battered job market will take time. They said companies will want profits to get stronger and feel more confident in the vigour of the economic rebound before they go on a hiring and spending spree.
Federal Reserve Chairman Alan Greenspan and his colleagues are expected to hold a main short-term interest rate at a 45-year low of 1 per cent when they meet next on Oct. 28, economists said. By holding rates at such low levels, businesses and consumers might be more inclined to boost spending and investment, something that would lift economic growth.
© The Globe and Mail
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