Jobless Claims Take Small Drop; Productivity Falls

The number of U.S. workers filing new claims for jobless benefits fell by 4,000 last week to 481,000, according to a Labor Department report on Thursday that still showed the job market under severe strain.

AP

The department revised up its estimate for jobless claims in the prior week to 485,000 from a previously reported 479,000. A department official said there were no special factors influencing the report and noted that the impact seen in prior weeks from hurricanes that displaced some workers had now worn off.

The jobless claims total last week was in line with Wall Street economists' forecasts for 480,000.

A four-week moving average of claims, which smoothes out weekly variations, was unchanged at 477,000 last week.

In a sign of the toll that months of job losses have taken, the department said that continuing claims for unemployment benefits climbed by 122,000 in the week ended Oct. 25, the latest period for which the data is available, to 3.84 million.

That was the highest level for continuing claims since February 1983.

In other economic news, non-farm business productivity grew at the slowest pace this year during the third quarter as output fell at the sharpest rate in seven years, a Labor Department report on Thursday showed.

Productivity increased at an annual rate of 1.1 percent, less than a third of the second quarter's 3.6 percent rate and down from 2.6 percent in the first quarter. That was still ahead of forecasts by Wall Street economists who had expected only a 0.8 percent annual rate of productivity growth for the third quarter.

Output fell at a 1.7 percent rate in the third quarter, the biggest decline since a 2.9 percent fall in the third quarter of 2001.

(Watch the accompanying video for more on what economists are saying about the numbers...)

Productivity is a measure of hourly output per worker.

Rising productivity helps to keep inflation in check.

Unit labor costs, a gauge of inflation and profit pressures that the Federal Reserve monitors closely, jumped at a 3.6 percent annual rate in the third quarter after declining 0.1 percent in the second quarter. That was well ahead of forecasts for a 2.8 percent annual rate of increase.

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