Unemployment benefit applications drop to 323K

WASHINGTON - The number of people applying for U.S. unemployment benefits fell 21,000 to a seasonally adjusted 323,000 last week, the lowest since late September and further evidence of an improving job market.

The Labor Department says the less volatile four-week average fell for the third straight week to 338,500. Both figures are near pre-recession levels.

Applications are a proxy for layoffs. They had spiked in early October because of the partial government shutdown and processing backlogs in California. But first-time applications have now fallen in five of the past six weeks. The decline indicates that employers are laying off fewer workers.

Jim O'Sullivan, chief U.S. economist for High Frequency Economics, said in a research note that the dip in jobless claims is "very encouraging." The data show that the economy is shaking off the effects of the 16-day government shutdown last month and that the labor market is recovering, he added.

Hiring is also picking up. Employers added an average of 202,000 jobs per month from August through October. That's up sharply from an average of 146,000 in May through July.

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