New jobless claims drop unexpectedly to 545K

WASHINGTON (AP) — The number of newly laid-off workers seeking unemployment benefits fell last week to the lowest level since early July, evidence that job cuts are slowing.

The Labor Department said Thursday that initial claims for unemployment insurance dropped to a seasonally adjusted 545,000 from an upwardly revised 557,000 the previous week. Wall Street economists expected claims to rise by 5,000, according to Thomson Reuters.

The decline was the third in the past four weeks. The four-week average, which smooths out fluctuations, dropped 8,750 to 563,000. Despite the improvement, that's far above the 325,000 per week that is typical in a healthy economy.

"The message here is that the labor market's healing process is agonizingly slow," Joshua Shapiro, chief economist at MFR Inc., wrote in a note to clients.

Another government report provided mixed news on the housing market. The Commerce Department said construction of new homes and apartments rose 1.5 percent to an annual rate of 598,000 units last month, the highest level since November and 24.8 percent above the record low hit in April. Applications for building permits, a good forecaster of future activity, also rose.

Still, the volatile multifamily sector drove the gains. The larger single-family sector dipped 3 percent last month to an annual rate of 479,000 units, the first setback following five straight monthly increases.

While single-family housing starts are well above the historic lows hit late last year and early in 2009, the recent results most likely are a rebound "from unsustainably weak results ... reinforced by a temporary boost to demand" from the $8,000 first-time homebuyer tax credit that ends Dec. 1, Shapiro said.