Jobless claims fall, labor market slowly improves

labor market

Initial claims for state unemployment benefits dropped by 9,000 in the week ending October 29 to a seasonally adjusted 397,000, the Labor Department said on Thursday.

"The labor market continues to stabilize in terms of the amount of people losing their jobs but ... the pace of adding new ones still remains underwhelming," said Peter Boockvar, an equity strategist at Miller Tabak and Co. in New York.

Futures for U.S. stocks edged higher following the data, and increased gains after the European Central Bank cut interest rates. U.S. Treasury debt prices fell.

Economists polled by Reuters had forecast claims edging down to 400,000.

The level of weekly claims remains well above pre-recession levels and has dipped below 400,000 only on brief occasions this year, suggesting no fast turnaround is imminent for the jobs market.

The claims data will not impact Friday's report on payroll levels during October, which are expected to show employers added 95,000 new jobs during the month. That is not considered a fast enough pace over time to bring down the unemployment rate much, if at all.

The four-week moving average of claims, considered a better measure of labor market trends, fell 2,000 to 404,500.

In a separate report, the Labor Department said U.S. nonfarm productivity increased during the third quarter while growth in wages and benefits slowed sharply, showing that some inflation pressures were easing even as the economy picked up pace.

Productivity rose at a 3.1 percent annual rate, the biggest increase since the first quarter of 2010. Unit labor costs fell 2.4 percent, a much bigger decline than the 0.8 percent rate forecast by analysts.

He said that could help the U.S. Federal Reserve build a case to do more to help the economy.

Compensation per hour rose 0.6 percent during the period, down from growth of 2.7 percent during the previous quarter and 5.6 percent in the first three months of the year.

Productivity, which measures hourly output per worker, had fallen during the first two quarters of this year.

Economists had expected the government's report would show productivity increased at a 2.8 percent rate. The rebound in productivity was in a line with the return to stronger economic growth during the third quarter following a sharp slowdown early in the year.

(Reporting by Jason Lange; Additional reporting by Richard Leong in New York; Editing by Andrea Ricci)