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Jobless claims drop in sign layoffs may be easing

New claims for unemployment benefits fell last week, showing little sign of a pick-up in layoffs in the wake of a slump in business and consumer confidence.
/ Source: staff and news service reports

The best that can be said is that things weren't worse.

Despite a volatile stock market in August, businesses held the line on staffing in the last week of the month, resulting in a slight drop in claims for unemployment aid.

Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 409,000, the Labor Department said on Thursday.

That points to a job market struggling to find strength, but is well short of a recession signal. Economists polled by Reuters had forecast claims falling to 410,000 last week. The prior week's claims were revised up to 421,000 from the previously reported 417,000.

But the data was in line with expectations and didn't cause too much excitement ahead of the crucial employment report from the Labor Department due Friday.

"Today's number is kind of ho-hum and does not change the discussion at all. While firing has not accelerated, hiring remains utterly modest," said Tom Porcelli, chief U.S. economist for RBC Capital.

A monthly measure of Internet job postings, a forward-looking indicator of U.S. employment growth, rose in August from July, suggesting employers may be ready to increase hiring after a mid-year soft patch.

The monthly reading by, which aggregates millions of listings from 30,000 employment websites, found U.S. job openings were up 4.5 percent from July to August, with 13 industries increasing job openings and five showing decreases.

SimplyHired found more job openings in agriculture, retail, finance and accounting, and in scientific fields such as lab technicians. Legal, real estate and military were among job sectors posting fewer open jobs last month.

While the claims data has no bearing on August's employment report, to be released on Friday, it also showed no evidence that businesses responded to the recent financial market turmoil by aggressively laying off workers.

Nonfarm employment is expected to have increased by 75,000 in August, according to a Reuters survey, dampened by a strike at Verizon Communications. Payrolls rose 117,000 in July.

About 45,000 Verizon workers went on strike during the survey period for August payrolls. Because they did not receive a paycheck that week, they would be counted as jobless in the government survey.

A Labor Department official said there were no special factors influencing last week's claims report. The Verizon strike helped to push up claims in the last two weeks.

The four-week moving average of claims, considered a better measure of labor market trends, rose 1,750 to 410,250 last week.

The number of people still receiving benefits under regular state programs after an initial week of aid dropped 18,000 to 3.74 million in the week ended August 20.

The number of Americans on emergency unemployment benefits increased 31,261 to 3.12 million in the week ended August 13, the latest week for which data is available.

A total of 7.34 million people were claiming unemployment benefits during that period under all programs, up 45,531 from the prior week.

In a potentially worrisome sign for the economy, however, U.S. worker productivity fell this spring at a faster pace than previously estimated. Meanwhile, labor costs rose at a faster clip.

Productivity declined at an annual rate of 0.7 percent in the April-June period, a bigger drop than the 0.3 percent decline reported a month ago. Labor costs rose at an annual rate of 3.3 percent, faster than the 2.4 percent increase originally reported.

The changes reflected last week's revisions to overall economic growth, which showed the economy's output barely growing in the spring.

Both declining productivity and rising costs could be a threat to corporate profits. But it may also be a sign that workers have reached their limit after years of being stretched to do more with less.