WASHINGTON – New claims for unemployment benefits (search) last week dipped to a one-month low, a sign that companies are easing the pace of layoffs as they feel more confident that the economic rebound won't fizzle.
The Labor Department (search) reported Thursday that for the work week ending Oct. 18, new applications filed for jobless benefits declined by a seasonally adjusted 4,000 to 386,000, the lowest level since Sept. 20.
For three straight weeks, claims have been running below 400,000, something economists view as a sign that that the battered job market may be staging a turnaround.
Last week's showing was better than the small increase that economists were forecasting.
Claims for the week ending Oct. 11 were revised up to 390,000 rather than the 384,000 previously reported, but still comported with economists' belief that the pace of layoffs are stabilizing.
New claims for unemployment benefits hit a high this year of 459,000 in the middle of April.
Amid signs of a recovery, economists widely expect the Federal Reserve (search) to hold a key short-term interest rate at a 45-year low of 1 percent when it meets on Tuesday. Keeping rates low may motivate consumers and businesses to spend and invest more, boosting economic growth.
The economy, which grew at a decent 3.3 percent rate in the second quarter is expected to show a blistering 7 percent pace in the third quarter, economists predict. The government will release the economic growth figures for the third quarter on Oct. 30.
Although private economists believe it will take time for the economy to begin adding a significant number of jobs on a consistent basis, Treasury Secretary John Snow recently predicted that stronger economic growth this year would create "roughly 2 million new jobs from the third quarter of this year to the third quarter of 2004."
In September, the economy added jobs -- 57,000 of them -- for the first time in eight month, helping to keep the nation's unemployment rate steady at 6.1 percent.
Thursday's report also showed that the four-week moving average of new jobless claims, which smooths out week to week fluctuations, held steady at 392,250 last week, unchanged from the week before.
Meanwhile, the number of unemployed workers collecting jobless benefits for more than a week fell by 84,000 to 3.5 million for the work week ending Oct. 11, the most recent period for which that information is available. That marked the lowest level since April 5.
Even with the encouraging signs raised by the latest jobless claims figures, economists said businesses will want profits to improve and will need to feel even more secure about the vigor of the recovery before they go on a hiring and spending spree.