Fewer Americans sought first-time unemployment benefits last week in a sign that layoffs are moderating. Inflation remained modest in September.
The Labor Department said Thursday that new jobless claims dipped to a seasonally adjusted 514,000 from an upwardly revised 524,000 the previous week. It was the fifth decline in six weeks and was below what Wall Street economists had forecast.
The less volatile four-week average fell to 531,500.
Continuing claims, an indicator of how hard it is for laid-off workers to regain employment, dropped by 75,000 to 5.99 million — its lowest level since March. Continuing claims data lags initial claims by a week.
Pennsylvania had the largest increase in first-time claims, attributed to layoffs in the construction, primary metals, furniture and food industries. Next were Washington, Wisconsin, Missouri and Texas. Florida reported the largest drop in claims. The state data lag initial claims by one week.
"The pace of layoffs continue to abate, and that's good news," said Diane Swonk of Mesirow Financial. "What we'd like to see is better news, and that is when we finally reverse course and start to generate jobs again."
Employers have cut a net total of 7.2 million jobs since the recession began in December 2007, sending the unemployment rate to a 26-year high of 9.8 percent.
Most economists believe the economy will grow at about a 3 percent pace in the second half of the year. But Federal Reserve Chairman Ben Bernanke has said that even with that rate of growth, the jobless rate will remain above 9 percent through next year.
A government watchdog agency said Thursday that businesses receiving federal contracts under President Obama's economic stimulus plan have reported creating or saving more than 30,000 jobs in the first months of the program.
The numbers in the report, released by the independent Recovery Accountability and Transparency Board, reflect jobs linked to less than $16 billion in federal contracts, such as construction at military bases or within national parks. That's a fraction of the $787 billion stimulus.
White House Chief Economist Jared Bernstein said it was "too soon to draw any global conclusions" from the data, but that preliminary indications are that the Recovery Act "exceeds our expectations and that about 1 million jobs have been saved in the first seven months.
The Labor Department also reported that consumer prices rose 0.2 percent last month, matching economists' expectations. The core measure of consumer inflation, which excludes energy and food, also ticked up 0.2 percent, slightly higher than the 0.1 percent increase analysts had forecast.
Over the past 12 months, consumer prices are actually down 1.3 percent, reflecting a severe recession that has kept a lid on price pressures across a wide range of products and services.
Energy prices were up 0.6 percent in September after a much bigger 4.6 percent jump in August. Food costs slipped by 0.1 percent, reflecting lower costs for meat and fresh vegetables.
"The overall CPI numbers on a year-over-year basis are still very tame. This is one of the few things out there helping consumers," said Swonk, of Mesirow Financial.
While the price pressures remained modest, the low inflation rate will keep more than 57 million Americans receiving Social Security from getting a cost of living adjustment, the first time in three decades that has happened. President Obama on Wednesday urged Congress to provide a one-time payment of $250 to help senior citizens cope. The payments would cost about $13 billion.
The absence of inflation pressures has given Federal Reserve policymakers room to leave a key interest rate at a record low of zero to 0.25 percent since last December in an effort to boost the economy.
From NPR staff and wire reports
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