Far fewer people sought new unemployment benefits last week than just three months ago, the Labor Department said Thursday.
The number of people applying for benefits fell last week to 366,000, the fewest since May 2008. If the number stay that low consistently, it could signal that hiring is strong enough to lower unemployment, analysts say.
The unemployment rate in November was 8.6 percent. The last time jobless applications were this low, the rate was 5.4 percent.
Other economic indicators released Thursday were mixed. Wholesale prices rose a modest 0.3 percent last month, whileindustrial production fell 0.2 percent.
Economists said the decline in output at the nation’s factories, mines and utilities was not good news, but they also noted it followed steady gains over the previous six months.
The four-week average of unemployment applications, which smooths fluctuations, dropped last week to 387,750. That’s the lowest four-week average since July 2008. The four-week average has declined in 10 of the last 12 weeks.
“Labor market conditions have taken a turn for the better in recent weeks,” Michael Gapen, an economist at Barclays Capital, said in a note to clients. “Payroll growth should improve in the coming months.”
Applications for unemployment benefits are a measure of the pace of layoffs. Job cuts have fallen sharply since the recession, but employers have been hiring at only a modest pace. When applications fall below 375,000 consistently, that usually signals that hiring is strong enough to lower the unemployment rate.
The downward trend comes as Congress is wrangling over whether to extend emergency unemployment benefits, which are set to expire at the end of this year.
Other recent reports have suggested that the job market is improving a bit. In the past three months, net job gains have averaged 143,000 a month. That compares with an average of 84,000 in the previous three months.
In November, employers added 120,000 jobs, and the unemployment rate fell to 8.6 percent from 9 percent. That was the lowest unemployment rate in 2 and a half years. But about half that decline occurred because many of the unemployed gave up looking for work. When people stop looking for a job, they’re no longer counted as unemployed.
About 6.7 million people are receiving unemployment benefits. About 2 million will lose their benefits by mid-February if the emergency program expires.
Lawmakers differ over how long benefits should last. The House passed a Republican bill Tuesday that would renew emergency aid but reduce the maximum duration to 59 weeks from the current 99 weeks.
Democrats want to keep the full 99 weeks. The measure is part of broader legislation in the Democratic-led Senate that would also extend a Social Security tax cut.
The decline in manufacturing output reported by the Federal Reserve was the first in seven months and was largely because factories made fewer autos. But production of home electronics, appliances and business equipment also dropped.
Economists noted that more recent data from regional Fed banks suggests manufacturing grew sharply in both the Northeast and Philadelphia region in December.
“One month is not a trend,” said Dan Greenhaus, chief global strategist with BTIG.
Factory output, the biggest component of industrial production, decreased 0.4 percent, the Federal Reserve reported. The decline was mainly because of steep drop in the production of motor vehicles and parts. When stripping out auto production, which can be volatile from month to month, factory output fell just 0.2 percent.
Meanwhile, companies paid 0.3 percent more for such items as food and pharmaceuticals. But energy prices barely rose, keeping inflation in check.
In the 12 months ended in November, wholesale prices have increased 5.7 percent, down from a 5.9 percent year-over-year pace in October, the Labor Department said Thursday. It’s the smallest yearly increase since March. The department’s producer price index measures price changes before they reach consumers.
Excluding the volatile food and energy categories, the so-called “core” index rose 0.1 percent, after a flat reading the previous month. In the 12 months ending in November, the core index rose 2.9 percent, up a yearly pace of 2.8 percent in October.
Most economists say they think inflation has peaked and will slowly decline next year. That’s because prices for oil and many agricultural commodities have fallen from their highs this spring. Slower growth in China and a possible recession in Europe have reduced global demand for energy and other goods.
Producer price inflation “appears to have peaked and begun a slow retreat,” Steven Wood, an economist at Insight Economics, said in a note to clients.
Lower price growth means consumers will have more buying power, potentially raising consumer spending. The jump in gas and food prices earlier this year limited the ability of consumers to buy other goods, thereby slowing the economy.
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