By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — The number of people who filed new claims for unemployment benefits fell 21,000 to 434,000 in the latest week, marking the third straight decline and the lowest level since early July, the U.S. Labor Department reported Thursday.
Most economists believe weekly claims have to start moving toward 400,000 to signify an upswing in hiring, so the news is sure to be viewed positively — and indeed, stock market futures (SPZ10 1,186, +7.30, +0.62%) were pointing toward opening gains on Wall Street. Yet claims have bounced around all year and it’s unclear whether the latest data reflects the start of a sustained downward trend.
Economists polled by MarketWatch had expected initial claims to rise to a seasonally adjusted 450,000 in the week ended Oct. 23. Claims for last week were revised up by 10,000 to 455,000.
Weekly claims in the range of 450,000 have typically been associated with a sluggish economy.
New applications for jobless benefits are now 4.4% lower compared to the end of 2009 and they’ve dropped an even larger 14% from a midsummer peak of 504,000.
A more accurate gauge of employment trends is the four-week average of initial claims, which is less volatile than the weekly number. The four-week average decreased by 5,500 to 453,350.
Despite the latest drop in claims, there’s still scant evidence the U.S. economy is starting to add jobs at a more rapid clip. Most companies won’t hire until demand for goods and services increase and they see clear evidence that the economy is perking up.
The U.S. likely expanded at a mediocre 2.1% pace in the third quarter, just slightly above second-quarter growth of 1.7%, according to the MarketWatch forecast of economists. The economy expanded at a 3.7% clip the first three months of 2010.
In the week ended Oct. 16, meanwhile, the government reported the number of workers who continued to receive benefits under regular state unemployment programs fell 122,000 to 4.36 million. The four-week average of continuing claims dipped 38,500 to 4.45 million. The data is seasonally adjusted.
Some 4.66 million people received extended federal benefits in the week ended Oct. 9, down from 5.07 million the prior week. Extended benefits of up to almost two years are offered to some workers after they exhaust state eligibility. Regular benefits last six months in most states.
Altogether, 8.46 million people were getting some kind of government benefit in the week ended Oct. 9, the latest data available. That was down from 8.85 million the prior week.
