Jobless benefit applications drop to 453,000

WASHINGTON -- Applications for jobless benefits dropped last week for the third time in four weeks, a sign that employers are cutting fewer jobs.

New claims for jobless benefits fell by 16,000 to a seasonally adjusted 453,000, the Labor Department said Thursday. Still, they are higher than they would be in a healthy economy and not low enough to signal rapid job growth.

The claims figures are "mildly encouraging" and "moving in the right direction," said Michael Gapen, senior U.S. economist at Barclays Capital. But they need to fall to between 400,000 and 425,000 to indicate that hiring is picking up, he said.

In a separate report, the Commerce Department said that economic growth slowed in the second quarter, to a 1.7 percent annual rate from 3.7 percent in the January-March quarter.

The second quarter figure is slightly higher than last month's estimate of 1.6 percent. The modest upward revision was the result of a little more consumer spending than first estimated, but hardly enough to have a significant effect on the broader economy.

Most economists expect growth to be similarly weak in the July-September quarter, with estimates ranging between 1.5 percent and 2 percent. The government's first report on third quarter GDP will be released Oct. 29.

Stocks rose in response to the reports. The Dow Jones industrial average moved up 44 points in morning trading. Broader indexes also rose.

Mortgage rates fell this week, according to mortgage buyer Freddie Mac. The average rate for a 30-year fixed loan dropped to 4.32 percent, matching the lowest rate on records dating back to 1971.

Mortgage rates have been at or near the lowest levels in decades since the spring as investors poured money into the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.

Jobless claims are at the same level they were two weeks ago. Initial claims have fluctuated around 450,000 for most of this year.

The four-week average of claims, a less-volatile measure, dropped for the fifth straight week to 458,000, the lowest level in two months.

Applications for unemployment benefits, while volatile, provide a real-time snapshot of the job market. The weekly claims figures are considered a measure of the pace of layoffs and an indication of companies' willingness to hire.

Initial claims have fallen sharply since June 2009, the month the recession ended. They topped 600,000 at the end of that month.

But most of that decline took place last year.

The economy has slowed sharply this year, discouraging many employers from hiring. Earlier this week, a survey by the Business Roundtable, a group of chief executives, found that only 31 percent of CEOs said they expected to increase their payrolls in the next six months, down from 39 percent in June. The June reading was the best since the recession began in December 2007.

Companies added a net total of 67,000 jobs last month, but that's not nearly enough to reduce the unemployment rate, which is at 9.6 percent.

With jobless claims high, many economists expect another anemic month of job creation when the government issues its next monthly employment report Oct. 8.

The number of people continuing to receive jobless benefits fell by 83,000 to just below 4.5 million, the department said. But that doesn't include several million people who are receiving unemployment aid under extended programs approved by Congress during the recession.

The extended benefit rolls dropped by about 300,000 to 4.9 million in the week ending Sept. 11, the latest data available. All told, about 8.8 million people received unemployment aid that week.

Some companies are still cutting workers. Last week, pharmaceutical company Bristol-Myers Squibb Co. said it would eliminate about 3 percent of its positions over the next six months. That's about 840 jobs out of 28,000 worldwide.