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Applications for unemployment aid drop to 390,000

Photo by Lindsey Grewe 

Photo by Lindsey Grewe 

WASHINGTON ? The number of people who applied for unemployment benefits last week fell to the lowest level since April, a sign that employers could be stepping up hiring.

The Labor Department said Thursday that weekly applications dropped to a seasonally adjusted 390,000. It was the third decline in four weeks. The four-week average, a less volatile measure, fell to 400,000, also the lowest point since April.

The downward trend in applications suggests businesses are laying off fewer workers. Still, applications need to consistently drop below 375,000 to signal sustained job gains. They haven't been at that level since February.

Separately, the Commerce Department said the U.S. trade deficit fell in September to its lowest point this year. Foreign sales of American-made autos, airplanes and heavy machinery pushed exports to an all-time high. The deficit narrowed 4 percent to $43.1 billion, the third straight decline.

Stock futures held early gains after the reports were released.

The outlook for hiring has been mixed in recent months. The economy added only 80,000 jobs in October, the fewest in four months.

But the government also said last week that employers added more jobs in August and September than it had initially reported, and the unemployment rate dipped to 9 percent.

A separate report this week showed that employers advertised more jobs in September than at any other point in the past three years. That's a positive sign for future hiring, since most companies typically take one to three months to fill vacant positions.

Modest economic growth has helped calm recession fears. The economy expanded at a 2.5 percent annual pace in the July-September quarter, the government said. While that was the best quarterly growth in a year, it would have to be nearly twice as high — consistently — to make a major dent in the unemployment rate.

The unemployment rate has been stuck near 9 percent for more than two years, and the Federal Reserve said last week that it is not expected to fall significantly through the end of next year.

Another concern is that the growth came after consumers spent more while earning less, a trend that economists fear can't be sustained. Many also worry that Europe's debt crisis could intensify and throw the continent into a recession, which would slow U.S. exports and reduce growth.

Employers pulled back on hiring this spring, after rising gas prices cut into consumer spending and Japan's March 11 earthquake disrupted supply chains. That slowed U.S. auto production.

Auto output has rebounded in recent months and gas prices have come down from their peak in early May. But the price of crude oil has jumped 22 percent since the beginning of October and is nearing $100 a barrel. Some analysts worry that gas prices could soon rise and approach $4 per gallon early next year.