Washington, Nov. 6--The number of U.S. workers filing first-time applications for unemployment benefits plummeted to a 34-month low last week, surprising Wall Street. Simultaneously, a third-quarter productivity report showed U.S. workers boosted their productivity at the fastest rate in 18 months.
Thursday morning's one-two punch of fewer jobless claims and higher output levels--particularly since the productivity report showed the first increase in workers' hours in more than three years--indicates the fastest economic growth in two decades won't be slowing down soon.
Initial jobless claims fell by a larger-than-expected 43,000 to 348,000 in the week ended Nov. 1, the Labor Department said. The level was the lowest since the week President Bush took office. The four-week average, which smooths out weekly fluctuations, dropped by 10,000 to 380,000, the lowest level since March 2001.
The numbers surprised Wall Street. Economists surveyed by Dow Jones and CNBC had expected a decline of just 6,000. A Labor Department spokesman said the decline was magnified by a surge in claims the previous week related to labor strikes in California. An estimated 10,000 of the 391,000 initial claims filed in the week of Oct. 25 were related to the strikes, he said. (The Oct. 25 figure had originally been reported at 386,000. The department routinely revises its initial estimates.)
Last week marked the fourth consecutive week that initial jobless claims have held below 400,000. Economists regard numbers below that threshold as evidence of a stabilizing labor market. Most forecasters expect the pace of job creation to accelerate over the next few months because of rapid economic growth. Last week, the government reported the economy expanded 7.2% in the third quarter, the fastest pace in two decades, while claims for unemployment insurance have shown signs of falling.
