U.S. jobless claims drop

The number of newly laid-off workers seeking unemployment benefits in the United States dropped slightly last week to its lowest level in two months, a sign that employers are cutting fewer jobs.

The U.S. Labour Department said new claims for jobless benefits fell by 3,000 to a seasonally adjusted 450,000, the third decline in four weeks.

Analysts polled by Reuters had forecast claims rising to 460,000 from the previously reported 451,000 the prior week, which was slightly revised up to 453,000 in Thursday's report.

Claims have fallen by 11 per cent in the past month, after jumping to 504,000 in the week ending Aug. 14.

That indicates layoffs are easing, even as the pace of economic growth has slowed since earlier this year.

The four-week average of new claims, which reduces volatility, dropped sharply to 464,750, down 13,500 from the previous week.

Slow pace

The report follows other data earlier this week that shows the economy is still growing, but at a slow pace. Reports on retail sales and industrial production both showed modest gains.

Still, many economists forecast that economic output will increase by less than two per cent in the current quarter. That's down from 3.7 per cent in the January-to-March quarter and not fast enough to reduce the unemployment rate, which is currently 9.6 per cent.

The unemployment claims report covers the week that included Labour Day, and claims frequently drop in holiday-shortened weeks.

Initial claims are still above levels that would signal widespread hiring. In a healthy economy, claims usually fall below 400,000.

The number of people receiving benefits fell by 84,000 to just below 4.5 million. But that doesn't include several million people who are receiving unemployment aid under extended programs approved by Congress during the recession.

The extended benefit rolls fell by more than 500,000 to just under five million in the week ending Aug. 28, the latest data available.