updated 11/18/2004 8:55:24 AM ET 2004-11-18T13:55:24

The number of people filing new applications last week for unemployment benefits dipped last week, offering a hopeful sign for recovery in the nation’s labor market.

Major Market Indices

The Labor Department reported Thursday that new claims for unemployment insurance dropped by a seasonally adjusted 3,000 to 334,000 for the week ending Nov. 13. That was the lowest level since the end of October.

Last week’s decline followed an increase in new filings of 5,000 in the prior week.

While the economy’s recovery from the 2001 recession has become more deeply rooted, the labor market has struggled to get on firmer footing as companies felt cautious about hiring. But that caution on the part of businesses has been slowly fading, contributing to a pickup in hiring.

In October, companies added a sizable 337,000 new jobs. Although many of those jobs were for hurricane cleanup, the expansion in payrolls still raised hopes that the recovery in the labor market — which had been uneven — was really gaining momentum.

The Federal Reserve cited improvements in the labor market last week when it decided to boost short-term interest rates by one-quarter percentage point to 2 percent.

With new signs that inflation is heating up again along with recent economic reports showing brisk industrial and housing activity, economists believe Fed policy-makers probably will raise rates for a fifth time this year at their next meeting on Dec. 14.

Thursday’s report also showed that the more stable four-week moving average of jobless claims, which smooths out week-to-week fluctuations, rose by 1,000 last week to 338,250. Hurricanes that had ripped through the Southeast had resulted in a rise in filings for unemployment benefits in recent weeks.

Meanwhile, the number of people continuing to draw unemployment benefits for the week of Nov. 6 — the most recent period for which that information is available — stood at 2.8 million, a decrease of 16,000 from the prior week. When compared with a year earlier, the improvement is more clear. A year ago, the number of people collecting claims was 3.5 million.

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