Oct 27, 9:43 AM EDT

Applications for US unemployment benefits fall to 258,000

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AP Photo/John Amis

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WASHINGTON (AP) -- Fewer Americans sought unemployment aid last week, a sign that businesses are holding onto their workers and hiring is likely solid.

THE NUMBERS: Weekly applications for unemployment benefits fell 3,000 to 258,000, the Labor Department said Thursday, not far from the 43-year low reached last month. Applications have been below 300,000 for 86 straight weeks, the longest such streak since 1970.

About 2.04 million people are receiving unemployment aid, the government said, the fewest since June, 2000.

THE TAKEAWAY: Applications are a proxy for layoffs, so the low level suggests companies are cutting few jobs. That typically means they are willing to add workers as well.

Hiring has slowed a bit in the past few months, but is still strong enough to lower the unemployment rate over time. Employers added 156,000 jobs in September, a modest gain. The unemployment rate was 5 percent, up from 4.9 percent the previous month. But the increase occurred mostly for a good reason: More Americans came off the sidelines and began looking for work.

KEY DRIVERS: Growth has been sluggish this year, averaging just 1.1 percent at an annual pace in the first half. Still, many economists expect it will accelerate a bit in the July-September quarter to about a 2 percent to 2.5 percent pace.

Americans are buying new and existing homes at a steady pace and are expected to spend at a solid pace during the winter holiday shopping season.

Many businesses have worked off excess supplies in their warehouses and on store shelves. That means they may step up orders in the coming months to rebuild their inventories.

Manufacturing continues to struggle, however. Orders for long-lasting manufactured goods slipped 0.1 percent last month, the Commerce Department said in a separate report.

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