By Greg Robb, MarketWatch WASHINGTON (MarketWatch) -- The number of people filing for state unemployment benefits for the first time fell 1,000 to a seasonally adjusted 530,000 last week, the Labor Department reported Thursday. Claims have been trending lower but still remain well above levels typical of a healthy economy. The latest claims data coincided with a government report showing the U.S. economy returning to growth in the third quarter. See Economic Report. The meager decline in claims was something of a disappointment: Economists surveyed by MarketWatch had been looking for first-time claims to fall to 524,000. The level of initial claims in the week ended Oct. 17 was unrevised. The four-week average of new claims saw a bigger decline, falling 6,000 to 526,250. This marked the lowest number since the week ended Jan. 10. The four-week average is closely watched because it smoothes out the data to minimize the impact of one-time changes due to weather, strikes or holidays. Meanwhile, the number of people collecting regular state benefits fell by 148,000 in the week ended Oct. 17 to a seasonally adjusted 5.8 million, the fewest since the week ended March 21.The insured unemployment rate fell a tenth of a percentage point, to 4.4%. The Labor Department also reported that the four-week average of continuing claims dropped 78,750 to stand at 5.96 million. Continuing claims had peaked at 6.77 million late last June. The decline in continuing claims in the past few months could be an indication that companies are more willing to hire or conversely, that greater numbers of people were exhausting their benefits. Most likely, both explanations are in play. Typically, people are eligible for 26 weeks of state unemployment benefits. Eyes turn to October joblessness Initial claims represent job destruction, while the level of continuing claims indicates how hard or easy it is for displaced workers to find new jobs. The jobless-claims report shows businesses are still laying off workers at a rapid rate, and finding a replacement job is extremely difficult for those who've lost work. The nation's unemployment rate rose to a 26-year high of 9.8% in September. The government will release the latest data for October in eight days. Benefits are generally available for those who lose their full-time job through no fault of their own. Those who exhaust their unemployment benefits are still counted as unemployed if they are actively looking for work. More than half of those collecting state benefits ultimately exhaust their regular state benefits before finding work, usually after receiving checks for 26 weeks. Many of those who exhaust their state benefits are eligible to collect under special federal programs for another 13 or 26 weeks. In the week ended Oct. 17, 3.96 million people were collecting benefits through extended federal programs, down 67,627 from the previous week. The government doesn't report regularly on the number of people who've exhausted their extended federal benefits. The total number of people claiming benefits of any kind, not seasonally adjusted, in the week ended Oct. 10 was 9.39 million, compared with 9.44 million the previous week.

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