Applications for US unemployment benefits fell last week in latest sign of job market health

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WASHINGTON — The Labor Department reported Thursday that fewer Americans sought unemployment aid last week, fresh evidence that companies are confident enough in the economy to hold onto their workers.

THE NUMBERS: Weekly applications for jobless benefits dropped 5,000 last week to a seasonally adjusted 271,000. The four-week average, a less volatile measure, increased 3,000 to 270,750.

The number of people that are receiving benefits was mostly unchanged, at 2.18 million.

KEY DRIVERS: Businesses appear to have been mostly unfazed by a weaker economy in the July-September quarter, when growth slowed to just 1.5 percent at an annual pace. They haven't responded by cutting more jobs.

BIG PICTURE: Hiring is typically healthy when applications are so low. Employers added 271,000 jobs in October, the largest monthly gain this year. The unemployment rate fell to 5 percent from 5.1 percent in the previous month.

There have also been signs that average pay is finally picking up after roughly six years of sluggish growth. Average hourly wages rose 2.5 percent in October from a year earlier, the largest annual gain since 2009.

Still, that remains below the 3.5 percent pace that is typical in a healthy economy.

October's job gain came after two months of tepid hiring in August and September. Yet employers have added an average of 206,000 jobs a month this year. That's enough to lower the unemployment rate over time.

ANALYST'S VIEW: "Firms are holding onto employees" perhaps in part because they worry that replacing people will be difficult, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

THE TAKEAWAY: Applications are a proxy for layoffs, so the low level suggests companies are cutting few jobs.

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