National jobless claims fall, but still elevated

Fewer people applied for unemployment benefits last week, but the drop wasn't enough to reverse a big increase the previous week.

Applications for jobless benefits fell by 23,000 to a seasonally adjusted 452,000, the Labor Department said Thursday.

The decline comes after the department substantially revised the previous week's figure to show a rise of 26,000. That was double the increase initially reported.

Even with last week's decline, applications remain stuck near the 450,000 level. They have fluctuated around that point for most of this year.

"The underlying trend in claims still looks resolutely flat, which means we see little chance of any sustained improvement in the private sector payroll numbers any time soon," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

The revision occurred after several states that had estimated their totals from two weeks ago subsequently found that claims were higher than estimated.

The four-week average, a less volatile measure, dropped by 4,250 to 458,000. Still, that's above the figure from two weeks ago.

Sluggish economic growth hasn't been enough to lower the unemployment rate or significantly reduce the level of unemployment claims. September's 9.6 percent jobless rate is only a fraction lower than the 9.7 percent rate in January.

Economists don't expect that will change in the near future.

Claims fell steadily last year after the recession ended in June 2009, dropping from roughly 600,000 to about 470,000. But not much progress has been made this year. Economists say that claims need to fall below 425,000 to signal that employers are stepping up hiring.

Some companies are still laying off workers, even as their profits grow. Xerox Corp. said Thursday it will cut 2,500 jobs, or 2 percent of its work force over the next year. The cuts are part of the company's restructuring following its $6 billion acquisition of Affiliated Computer Services. Xerox also said its profit doubled in the third quarter, partly because of the acquisition.

AT&T Inc. reduced its work force by more than 4,000 employees in the July-September quarter, cutting staff in its traditional phone business. Still, it sold a record number of iPhones and said Thursday that its profit rose 4 percent.

Other employers say they are facing an unusual amount of uncertainty over the pace of economic growth and the path of government policies, such as taxes. That makes them reluctant to hire.

The economy grew by only 1.7 percent in the April-June quarter and many economists expect it to grow at a similarly weak pace in the second half of this year.

At the same time, the tax cuts enacted in 2001 and 2003 are slated to expire at the end of this year unless Congress extends all or part of them in a short session after the November elections.

The chief executive of heavy equipment maker Caterpillar Inc. said Thursday that he expects the U.S. economy to keep growing this year. But he added that "the recovery is weaker than we've seen historically, particularly given the depth of the 2009 recession."

"To drive economic growth, we encourage government policy makers to advance pro-business initiatives and a growth agenda," CEO Doug Oberhelman said.

The company reported a jump in its third quarter profits and raised its earnings estimates for the rest of this year.

The Federal Reserve, meanwhile, said in a report Wednesday that the economy grew at an uneven pace in the fall. Employers were reluctant to do much hiring because of the economic weakness.

The number of people continuing to receive jobless aid fell by 9,000 to 4.4 million, the Labor Department said Thursday. But that doesn't include several million people who are receiving benefits under extended programs approved by Congress.

The number of people on extended benefits rose by about 280,000 to just over 5 million people in the week ending Oct. 2, the latest data available. All told, about 8.8 million people received unemployment aid that week.