Jobless-aid sign-ups highest since August; still low, expert says

WASHINGTON -- More Americans applied for unemployment benefits last week, but claims for unemployment benefits remain at levels that suggest most workers enjoy job security, analysts said.

The Labor Department said Thursday that claims for unemployment aid rose by 7,000 to a seasonally adjusted 265,000, the highest since early August. Still, claims came in below 300,000 for the 87th straight week -- the longest such streak since 1970 when the workforce was much smaller.

"The level of claims remains extremely low, signaling that businesses are keen to hang onto staff, presumably because they are fundamentally quite optimistic about business conditions," Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a research note.

The less-volatile four-week average rose 4,750 to 257,750.

Overall, 2.03 million Americans are collecting unemployment checks, the fewest since June 2000 and down more than 7 percent from a year earlier.

Applications for unemployment aid are a proxy for layoffs, and most employers have been holding onto staff. The unemployment rate was 5 percent in September, close to what economists consider full employment.

But the pace of hiring has slowed this year. Employers have added an average 178,000 jobs a month so far in 2016, down from last year's monthly average of 229,000.

The Labor Department will release hiring numbers today for October. Economists expect to see an increase of 170,000 jobs and a drop in the unemployment rate to 4.9 percent, according to a survey by the data firm FactSet.

The Commerce Department reported last week that the U.S. economy expanded at the fastest pace in two years from July through September, pulling out of a slump that began late last year.

Another economic report from the Labor Department released Thursday said the productivity of American workers rose in the July-September quarter at the fastest pace in two years, while labor costs slowed.

Productivity increased at a 3.1 percent rate in the third quarter. It was a significant improvement from the previous three quarters, when productivity fell. Unit labor costs edged up a modest 0.3 percent in the third quarter, compared with a 3.9 percent jump in the second quarter.

The productivity figure was the best showing since a 4.2 percent gain in the third quarter of 2014. But the rebound was expected to be temporary. Strong gains in productivity are needed to improve Americans' living standards.

Economists forecast that productivity will quickly fall back to the tepid gains seen since the 2007-09 recession.

"Following the burst of faster productivity growth during the late 1990s, which is usually attributed to the incorporation of desktop PCs into the workplace and the Internet, productivity growth has slowed again in most developed countries," said Paul Ashworth, chief U.S. economist at Capital Economics. "The longer this slowdown goes on for, the less confident we are of another technology-related acceleration."

America's service industries expanded less than projected in October, consistent with moderate growth in the biggest part of the economy.

The Institute for Supply Management's nonmanufacturing index fell to 54.8 from 57.1 in the prior month, which was the strongest in almost a year, the Tempe, Ariz.-based group's report showed Thursday. Readings above 50 signal expansion. The median forecast in a Bloomberg survey called for 56.

"This is still a moderate growth economy at best," said Robert Dye, chief economist at Comerica Inc. in Dallas, who projected the index would cool to 55. "Domestic demand is well supported" for service providers, while "there are still headwinds for manufacturing."

The Institute for Supply Management's nonmanufacturing survey covers an array of industries, including utilities, retailing and health care, and also factors in construction and agriculture.

Information for this article was contributed by Paul Wiseman, Martin Crutsinger, of The Associated Press and by Shobhana Chandra of Bloomberg News.

Business on 11/04/2016

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