Fewer people applied for unemployment benefits last week, the second drop in a row and a hopeful sign the job market could be improving.
The Labor Department said Thursday that initial claims for jobless benefits dropped by 21,000 to a seasonally adjusted 434,000 in the week that ended Oct. 23.
It was the second-lowest number for claims this year. The only time it was lower was during the July 10 week, and that week was affected by the Independence Day holiday when state unemployment offices were closed.
Stock futures rose after the report was released. Wall Street analysts had expected a tiny increase.
Claims will need to keep falling to signal a widespread increase in hiring. Claims have fluctuated around 450,000 for most of this year, and have fallen below that level seven times. But they have always rebounded in subsequent weeks, and haven't remained below 450,000 for longer than two weeks.
John Ryding, an economist at RDQ Economics, said in a note to clients that the drop is "encouraging." But he added that "we would need to see a couple more weeks of lower claims readings to be comfortable that employment growth is improving."
The four-week average, a less volatile measure, dropped by 5,500 to 453,250, the lowest level since the week of July 24.
Applications for unemployment aid fell steadily last year after the recession ended in June 2009, dropping from 600,000 to about 450,000 by January of this year.
Employers haven't done much hiring in recent months with economic growth so weak. The economy grew 1.7 percent in the April-June period, an anemic pace in normal times and even worse in the aftermath of the Great Recession.
Economists expect that the Commerce Department on Friday will report slightly better growth of 2 percent for the July-September period. But that's still sluggish after a deep recession.
The economy needs to grow by at least 5 percent for a full year to bring down the unemployment rate by a percentage point, economists estimate. The jobless rate is currently 9.6 percent, down only slightly from 9.7 percent in January.
Some companies are adding workers. Pharmaceuticals company Novartis AG said Wednesday that it will add 300 new jobs and invest $600 million over the next five years in its research headquarters in Cambridge, Mass. And engine maker Cummins Inc. said Tuesday that it will expand its headquarters in Columbus and add at least 350 jobs by 2012.
The number of people continuing to receive jobless aid also dropped sharply last week, falling by 122,000 to 4.36 million, the department said. But that doesn't include an additional group that is receiving extended benefits under an emergency program approved by Congress during the recession.
The emergency benefit rolls fell by more than 400,000 to about 4.7 million for the week ending Oct. 9, the latest data available. Much of the decline is likely due to people using up all the unemployment aid they are eligible for.
All told, about 8.8 million people received unemployment benefits that week.