New U.S. claims for unemployment benefits fell below 400,000 last week for the first time in five weeks and a trend reading also edged lower, suggesting a modest improvement in the still-moribund labor market.

U.S. non-farm productivity rises 3.1 pct in Q3

U.S. nonfarm productivity increased during the third quarter while growth in wages and benefits slowed sharply, showing that some inflation pressures were easing even as the economy picked up pace.

COMMENTS:

YELENA SHULYATYEVA, U.S. ECONOMIST, BNP PARIBAS, NEW YORK

JOBLESS CLAIMS: It declined below 400,000, but it's not telling us whether we would have a significant improvement or pickup in payroll growth. We are still expecting 100,000 private payrolls increase tomorrow and 75,000 in total with no improvement in the unemployment rate. This is not enough to mean there is an acceleration in payrolls.

PRODUCTIVITY: The big spike in the quarter would prove temporary, a reversal from the previous factors that were a drag on productivity. The odds are that productivity will slow to a moderate pace. Real compensation was negative for a second quarter in row. This means income and compensation are slowing down. This is telling us without growth in income and compensation, further growth in consumption is not possible.

ROBBERT VAN BATENBURG, HEAD OF GLOBAL RESEARCH, LOUIS CAPITAL MARKETS, NEW YORK

JOBLESS CLAIMS: The market has been expecting rather strong labor reading at the end of October. I don't know whether it's temporary or it's sustainable. We are moving toward the year-end retail season. Retailers have been slow to add jobs and inventory. Now they seem to be responding by adding more jobs. They are also more additions of jobs in agriculture and autos in some states. Things are picking up a bit. Things might not be as bad as some had thought.

PRODUCTIVITY: This means less inflation. That could formulate Fed policy going forward. This could be another round of asset purchases particularly mortgage-backed securities.

PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABAK + CO IN NEW YORK

The labor market continues to stabilize in terms of the amount of people losing their jobs but as seen with yesterday's ADP report, the pace of adding new ones still remains underwhelming relative to what is needed to substantially reduce the unemployment rate.

RAVI BHARADWAJ, MARKET ANALYST, TRAVELEX GLOBAL BUSINESS PAYMENTS, WASHINGTON

We have breached the 400,000 level, which is usually considered a pretty notable psychological level for most investors. That said, the breach hasn't been quite significant. On an ordinary day, this would have probably made a greater impact on market activity. But it looks like market activity may be subdued as investors really look forward to the European Central Bank decision, which should be announced within the next couple of minutes.

VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS

The change is not that significant because claims have not ventured far from the 400k-mark (plus or minus 11k) for the past six weeks. Since the large drop of 33k at the end of September (which brought claims down to this more-pleasant level), claims have averaged 403k. The four-week moving average was more or less the same at 404,500 -- an improvement of 2k from last week's average.

MARKET REACTION:

STOCKS: U.S. stock index futures edge higher, extending earlier gains.

BONDS: U.S. Treasury debt prices extend losses

FOREX: The dollar trims losses versus euro

ENERGY: Brent, U.S. crude futures hold gains

Unemployment