US jobless claims fall by 10,000 to hit a 14-year low

Fewer people applied for U.S. unemployment benefits last week, a sign that the job market should continue to improve.

The Labor Department said Thursday that weekly applications fell 10,000 to a seasonally adjusted 278,000. The four-week average, a less volatile measure, declined 2,250 to 279,000, the lowest level in more than 14 years.

Applications are a proxy for layoffs and have fallen 18.5 percent in the past year. This suggests rising economic confidence among businesses, causing them to keep their workers and potentially look to hire more employees.

"The Labor Department noted no special factors in this week’s report," Jesse Hurwitz, a Barclays research economist, wrote via e-mailed analysis. "The continued downward trend for initial and continuing claims is consistent with solid labor market improvement; however, given that this week’s report corresponds to the period after the survey week for the October payrolls report, our forecast for nonfarm payroll gains of 225,000 in tomorrow’s report remains unchanged."

The decline in applications has overlapped with stronger hiring this year.

Employers have added an average of 227,000 jobs a month in 2014, up from an average of 194,000 last year. Over the past 12 months, employers have added 2.64 million jobs, the best showing since April 2006. The unemployment rate has fallen to 5.9 percent, a six-year low.

Economists predict that the Friday jobs report will show that 230,000 jobs were added in October. The unemployment rate is projected to hold steady.

U.S. companies added 230,000 jobs in October, payroll processer ADP said Wednesday. The result was the highest in four months and a sign that businesses are still willing to hire despite signs of slowing growth overseas. Job gains above 200,000 are usually enough to lower the unemployment rate.

Still, the improvement in hiring has yet to translate into higher wages. Average wages have grown slightly faster than inflation. Median annual household income at $54,045 remains 4.6 percent lower than incomes when the recession began in late 2007, according to Sentier Research.

The figures indicate that the government's jobs report on Friday could show a healthy pace of hiring. The ADP numbers cover only private businesses and sometimes diverge from the government's more comprehensive report.

Economists forecast that the government's report will show that all employers, including government agencies, also added 230,000 jobs in October, according to a survey by FactSet.

The job gains in the ADP report were broad-based: Construction firms added a solid 28,000 jobs last month, while manufacturing gained 15,000 positions. Professional and business services, which include mostly higher-paying positions such as accountants and engineers, gained 53,000.

Hiring has been strong this year, despite some hiccups in economic growth. Employers have added an average of 227,000 jobs a month in 2014, which puts this year on pace to be the strongest year for job creation since 1999.

Other recent reports suggest that Friday's government jobs report could be a healthy one. Manufacturers hired at a faster pace in October than in the previous month, according to a survey by the Institute for Supply Management, a trade group.

And applications for unemployment benefits have fallen to 14-year lows, evidence that employers are cutting very few jobs.