Weekly 1st-Time Jobless Rate Drops : Economy: Figure hits 2-year low. Labor Department reports 2.6% worker productivity hike.

The number of first-time claims for unemployment insurance fell by 16,000 in late October to the lowest level in more than two years, and Americans’ productivity improved 2.6% in the third quarter, the Labor Department said Thursday in two upbeat economic reports.

Economists were encouraged by the positive news but cautioned that economic growth, while showing signs of improvement, will not take off anytime soon.

“The economy is beginning to grow more rapidly, but we still won’t have the kind of recovery that has followed past recessions,” said economist Bruce Steinberg of Merrill Lynch in New York.

New claims for unemployment benefits in the week ended Oct. 24 fell to 360,000, down from 376,000 the week before, the Labor Department said. It was the lowest level since the week ended Aug. 4, 1990, soon after the recession began. Economists had been looking for an increase of 5,000 to 10,000.

“The layoffs are stopping, but outright hiring is not really going on,” said economist Elliott Platt of Donaldson, Lufkin & Jenrette in New York.

The Labor Department is scheduled today to report the unemployment rate for October and the growth, if any, in the nation’s payrolls. In advance, analysts predicted an unchanged jobless rate.

Some of the states with increases attributed them to layoffs in food processing and agriculture as harvests came to an end. Another factor was the return to a normal five-day filing week after the previous week, when claimants had only four days to file because of Columbus Day.

In the report on productivity, the department said output per hour of work increased at a 2.6% annual rate during the July-September quarter. It was the sixth straight quarter that productivity advanced and the best in six months.

The trend, if it continues, would be instrumental in fostering sustainable economic growth. But economists said the most recent increases appear to be the result of the lackluster economy and employers’ desire to wring more work from their existing staff rather than hire additional people.

In another report, Dun & Bradstreet Corp. reported that business failures increased 14.3% in the first nine months of the year and will smash the annual record set in 1991, despite signs of improvement in the economy.