Labor Department statistics released today showed a marked decline in initial jobless claims, extending a run of such declines.

Initial claims are an important barometer for layoffs and hiring. A 12K decline to 502,000 from the previous week, and a drop in the 4-week average to 519,750, is a strong indicator of improvement. The 4-week average is down 20% since the highpoint earlier this year, and initial claims look like those from the beginning of this year. Despite these facts, we are still well above the accepted 450,000 benchmark, which represents the point at which the labor market is theoretically adding jobs.

Continuing claims (which trail initial claims by a week) fell 2.4% to 5.6M, also beating out the expectations of market analysts. Congress has created the largest extension program to date for jobless claims, adding a total of 73 additional weeks to the base 26 weeks of benefits, and this fact must be kept in mind when analyzing such data. The 4.1M figure for people receiving extended benefits in the week ending Oct. 24, showed little change from the preceding week

The unemployment rate is at a 26-year peak of 10.2%, according to the Labor Department, with the market dumping 190,000 last week. With media technology powerhouse Adobe Systems Inc. announcing a 9% cut this week, and AOL LLC cutting 1.4% of its staff, investors concerns about a “jobless recovery” are piqued in the near-term.

Wisconsin led the states in initial claims (this state data, like continuing claims data, trails behind by a week), posting 1,501, largely due to a decline in manufacturing, construction and public administration. Texas, Illinois, Michigan and Puerto Rico also ranked among the top states for claims.

California, surprisingly (if one looks at recent data), had the biggest drop, at 6,752, where the construction and service sectors were cited as the cause. Florida, North Carolina, Georgia, and New York showed similar improvement.

The July-September quarter broke the four-quarter losing streak which preceded it, showing a 3.5% annual growth rate in the economy. The apparent paradox represented by economic growth and a flagging job market is considered a tightening of the belt by many economists, who anticipate continued depression in the labor market despite economic growth indicators.