Jobless claims fell 12,000 last week

Claims for unemployment benefits fell sharply last week, another sign that employers are hanging onto their workers in a growing economy.

Weekly jobless applications dropped 12,000 to a seasonally adjusted rate of 260,000, while the four-week average was unchanged at 271,000, the Labor Department said Wednesday.

{mosads}Job gains picked up pace in October to 271,000, the largest increase this year and a significant pick-up after a late summer slowdown. The jobless rate fell to 5 percent, the lowest level since 2008.

The November report is due out Dec. 4.

The improving labor market is expected to spur a long-awaited interest rate hike by the Federal Reserve next month.

A separate report showed on Tuesday that the U.S. economy grew at a 2.1 percent pace in the July-September quarter, faster than the 1.5 percent initially estimated, the Commerce Department said.

Meanwhile, consumer spending edged up only slightly last month as Americans remain cautious amid an economic rebalance following financial turbulence over the past few months.

Spending inched up 0.1 percent, the Commerce Department said in a separate report on Wednesday.

Americans’ paychecks seem to finally be rising as hiring remains steady and the labor market tightens, which should help boost spending through the holidays and into the new year.

Incomes rose 0.4 percent, double the amount of the September increase, while wages and salaries surged 0.6 percent, the biggest increase since May.

Consumer spending is closely watched because it accounts for about 70 percent of economic activity.