Unemployment claims drop below 400,000

First-time jobless claims dropped again last week to their lowest levels in five weeks, as the labor market made halting improvements. 

Applications for unemployment benefits dropped by 9,000 to 397,000 in the week that ended Oct. 29, from last week's revised figure of 406,000, the Labor Department reported on Thursday. 

The four-week moving average, a less volatile measurement, fell 2,000 to 404,500, from the previous week's revised average of 406,500. The monthly figures have shown consistent drops in recent weeks as companies curtail layoffs. 

The government is due to release figures for October on Friday, with estimates of job growth ranging between 95,000 and 125,000 — the unemployment rate is expected to remain stuck at 9.1 percent. 

Overall, the number of people receiving jobless benefits hit a six-month low — another sign the market could be stabilizing, although progress remains slow. 

Economists said claims for benefits need to drop below 375,000 to indicate a healthy job market, more jobs and a lower unemployment rate. 

Applications fell to 375,000 in February and stayed below 400,000 for two months, before hitting an eight-month high of 478,000 in April.

The economy generated 103,000 net jobs in September, well below what is needed to lower the unemployment rate — which stayed at 9.1 percent for the third straight month — but calming fears of a double-dip recession. 

Economic growth also helped to relax concerns last week when the Commerce Department announced the economy had grown 2.5 percent in the third quarter. 

A separate report on Wednesday showed that the jobless rate dropped in 75 percent of the nation's largest U.S. cities, a sign that job creation is happening across most of the country.

The Labor Department said that unemployment rates fell in 280 large metro areas from August to September — they rose in 61 and were unchanged in 31 — the best showing since April.

Also on Wednesday, the Federal Reserve lowered its forecast for economic growth this year to no more than 1.7 percent, much lower than its forecast in June that estimated expansion for the economy between 2.7 percent and 2.9 percent. 

The unemployment rate is expected to hold for this year and drop only slightly in 2012 — falling to about 8.6 percent, the Fed said in the report. 

The number of people continuing to receive jobless benefits dropped by 15,000 in the week ending Oct. 22 to 3.68 million.

Workers who have run through their 26 weeks of state benefits and are getting federal emergency and extended payments increased by about 39,300 to 3.49 million in the week ending Oct. 15, the Labor Department said. 

The total number of people claiming benefits in all programs for the week ending Oct.r 15 was 6.78 million, an increase of 103,117 from the previous week.

Extended benefits were available in Alabama, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Washington, West Virginia and Wisconsin during the week that ended Oct. 15.