WASHINGTON — Applications for unemployment benefits dropped last week to the second-lowest level this year, fresh evidence that companies are cutting fewer jobs.
First-time claims for jobless aid fell by 17,000 to a seasonally adjusted 421,000 in the week ending Dec. 4, the Labor Department said Thursday.
The four-week average of claims, a less-volatile measure, dropped for the fifth straight week to 427,500. That’s the lowest since August 2008, just before the financial crisis intensified with the collapse of Lehman Brothers.
Separately, the Commerce Department said businesses boosted wholesale inventories for the 10th straight month in October, and sales rose by the largest amount in seven months. Strong demand from businesses restocking depleted store shelves has helped the economy grow after the recession, and the latest data suggest that hasn’t tapered off.
Unemployment claims have fallen steadily in the past two months. Applications dropped to 410,000 two weeks ago — the lowest level in more than two years — and they have been below 450,000 for the past five weeks. That is raising hopes that companies will soon accelerate hiring.
The job market is also expected to benefit if Congress passes legislation that would extend tax cuts for two years and unemployment benefits through the end of next year.
Still, unemployment claims have been below 425,000 only for two of the past three weeks. Economists say they need to be below that level for an extended period to have any real impact lowering the nation’s unemployment rate.
In November, the economy added just 39,000 net jobs, and the unemployment rate rose to 9.8 percent. Many economists say that was only a temporary setback and that the downward trend in unemployment claims, along with other strong economic data, suggest December will be a stronger month for hiring.
The latest report on jobless claims adds “weight to our view that the November employment report did not provide a very accurate reading on the strength of job creation,” economists at RDQ Economics wrote to clients. “We expect an upward revision to November payrolls and a more solid reading on job creation in December than we saw in November.”
The weekly applications for unemployment benefits are considered a real-time snapshot of the job market. They reflect the level of layoffs but also can indicate whether companies are willing to add workers.
Unemployment will still be elevated for several years, economists say. Economists at Goldman Sachs project the jobless rate will be 8.5 percent by the end of 2012.
