Jobless benefits claims down 2,000 from last week

First-time claims for unemployment benefits dropped by 2,000 last week, which was below expectations even as employers laid off fewer workers. 

The number of people applying as jobless fell to a seasonally adjusted 339,000, the fifth straight weekly decline, the Labor Department reported on Thursday. 

Economists had expected a bigger drop after claims spiked in October. Several states had upgraded their computer systems and processed their backlogs, and many federal workers and contractors had filed for benefits during the 16-day government shutdown. 

The four-week moving average, which better reflects the direction of the job market, dropped 5,750 to 344,000, and has been steadily dropping all year.

Employers added 204,000 jobs in October, a positive sign for the troubled labor market, although the labor force participation rate fell to another 35-year low.

The private sector was responsible for 212,000 jobs last month, a sign that employers ignored the government shutdown last month. 

Fiscal uncertainty in Washington remains one of the biggest hurdles to a stronger labor market recovery and more robust economic growth. 

The unemployment rate rose to 7.3 percent last month from 7.2 percent in September, most likely from furloughed federal workers filing for benefits. 

The economy grew at a 2.8 percent annual rate in the July-September quarter, an improvement from the 2.5 pace in the second quarter. But economists have expressed some concerns about what is driving growth.

Consumer spending, which accounts for 70 percent of economic activity, is a driving force to boosting hiring. At the same time, employers need to pick up hiring so more consumers have a paycheck to spend. 

Congress is faced, once again, with renewing federal unemployment benefits into next year as the unemployment rate remains elevated across most states. 

The $24 billion cost of the reauthorization is likely to turn into a battle between Democrats, who support the continuation, and Republicans, who argue that the program has already spent billions and has done little to buoy the economy. 

A separate report on Thursday showed that worker productivity — a measure of hourly output — increased at a 1.9 percent annual rate in the third quarter, up from the 1.8 pace during the April-June period, according to the Labor Department.