First-time unemployment benefits hit nine-month low

The job market continued showing signs of life as first-time unemployment benefit applications dropped to their lowest levels since February. 

Weekly claims took a steep drop of 23,000, falling to a seasonally adjusted 381,000, the best performance in nine months as the labor market sputtered most of the year, the Labor Department said Thursday.

The four-week average, a less volatile measure than the weekly figure, fell to 393,250, the ninth drop in 11 weeks and the lowest since April. 

Economists say 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 added 120,000 jobs and the unemployment rate dropped to 8.6 percent in November from 9 percent the previous month, the lowest rate in two and a half years. Part of the drop was attributed to more than 300,000 people who stopped job-hunting. 

Job creation for August, September and October were all revised upward, and for the first time in nearly six years — April 2006, well before the start of the recession — the economy added an average of 100,000 jobs for the past five months. 

The economy has been churning out reams of upbeat data in recent weeks — shoppers hit the stores and their computers to start off the holiday season in record fashion. Consumer confidence is up, and manufacturing, which has led the economic recovery, is picking up pace, especially as demand for autos increases. 

The biggest problem facing the recovery is the sluggish housing market, which is still overloaded with foreclosures, tight lending standards and higher down-payment requirements. Record-low mortgage rates are spurring some refinancing, but nearly 25 percent of homeowners are underwater on their home loans. 

The number of people continuing to receive jobless benefits dropped by 174,000 in the week ended Nov. 26 to 3.58 million, the lowest level since September 2008. 

Workers who have run through their 26 weeks of state benefits and are getting federal emergency and extended payments decreased by about 211,600 to 3.31 million in the week ended Nov. 19, the Labor Department said. 

The total number of people claiming benefits in all programs for the week ended Nov. 19 was 6.57 million, a decrease of 431,307 from the previous week.

The report on hiring gains is following other positive signs of a more robust recovery. 

Manufacturing firms are boosting output and retailers reported a strong start to the holiday shopping season. Consumer confidence jumped in November to the highest level since July, and Americans' pay rose in October by the most in seven months.

Economists are expecting that growth in the final quarter of the year will increase to about a 3 percent annual rate, up from the 2 percent growth in the third-quarter, July-September period.

Still, U.S. officials, including Treasury Secretary Timothy Geithner, are closely monitoring the European debt crisis, which economists say threatens the nation's and the global economic recovery.