THE number of newly laid-off workers filing claims for unemployment benefits in the United States last week fell to the lowest level in 10 months, evidence that job cuts are easing as the economy slowly heals.

Still, companies are reluctant to hire and economists expect the unemployment rate will tick up to 9.9 percent when October's figure is reported today. The jobless rate hit a 26-year high of 9.8 percent in September.

The US Labor Department yesterday said first-time claims for jobless benefits fell 20,000 to a seasonally adjusted 512,000. That's better than economists' estimates of 523,000.

Economists closely watch initial claims, which are considered a gauge of the pace of layoffs and an indication of employers' willingness to hire new workers.

The four-week average, which smooths fluctuations, dropped to 523,750, its ninth straight decline. That's 135,000 below the peak for the recession, reached in early April.

Despite the improvement, initial claims remain well above the roughly 400,000 that economists say will signal job creation.

The US economy grew at a 3.5-percent annual pace in the July-September quarter, the government said last week, ending a record four straight quarters of decline and providing the strongest signal yet that the recession is over.

But economists worry that growth will slow early next year as various government stimulus programs wind down. That uncertainty has made many employers reluctant to hire.

In addition, many companies are squeezing more production from their existing work forces. Productivity, the amount of output per hour worked, rose 9.5 percent in the third quarter, the department said in a separate report.