WASHINGTON — Companies are more productive, fewer people are seeking unemployment benefits and service companies are adding jobs.
Ideally, those trends could signal stronger growth and more hiring. Yet until consumers consistently spend more, businesses are unlikely to hire enough to drive down unemployment.
But more consumers need jobs and raises to keep spending enough to help the economy grow. The paradox has kept the economy from thriving.
Weekly applications for unemployment benefits dropped to a seasonally adjusted 397,000, the Labor Department said. It’s only the third time since April that applications have fallen below 400,000.
Services companies, which employ about 90 percent of the work force, hired more in October after cutting jobs in the previous month, according to a survey by the Institute for Supply Management.
Overall growth for the service sector — which covers businesses from restaurants and hotels to financial services firms and retail companies — was mostly unchanged from September’s slow pace.
Companies ordered more factory goods in September for a third straight month, the Commerce Department said. The gain occurred largely because businesses spent more on industrial machinery, computers and software. It’s a sign that in the sluggish economy, many companies are investing in equipment, not in new hires.
On the downside, hoppers slowed their spending in October, according to monthly reports by retailers Thursday. Costco, Macy’s, Saks and Target are among the companies that reported results that fell slightly below Wall Street analysts’ expectations.