Dec. 9 (Bloomberg) -- The number of U.S. workers filing initial applications for unemployment benefits may have fallen last week, suggesting an improving labor market, economists said ahead of today's Labor Department report.

Jobless claims may have totaled 335,000 last week, down from 349,000 the week before, according to the median forecast of 41 economists in a Bloomberg survey. Jobless claims have dropped to a weekly average of 343,830 this year from about 402,000 in 2003. The report is to be released at 8:30 a.m. in Washington.

The decline in initial claims, along with slowing gains in productivity, suggest employers are holding onto more workers to help meet demand in an economy expected to grow this year at the fastest pace since 1999, economists said. A survey released Dec. 7 found that small and midsize companies plan to increase hiring.

``We have a reasonably health labor market right now, and it's generating enough income to keep consumers spending,'' said Michael Gregory, senior economist at BMO Nesbitt Burns Inc. in Toronto. ``Jobs are critical at this stage because wage growth hasn't been that robust and the tax cuts aren't there any more.''

The Labor Department also may say import prices held steady last month after rising 1.5 percent during October as petroleum prices retreated from record levels, the median economist forecast shows. The government's import price index is set for release alongside the jobless claims data at 8:30 a.m. in Washington.

The Commerce Department may report inventories at wholesalers increased by 0.5 percent for the second straight month in October, based on the median forecast of economists. The wholesale trade report is scheduled for release at 10 a.m. in Washington.

Job Gains

U.S. employers added 112,000 jobs last month, a report last week showed, well below the 200,000 median estimate of economists surveyed by Bloomberg before the report. Economists including BMO Nesbitt's Gregory say that while the report was disappointing, the 179,000 average payroll gain the past three months is sufficient to keep up with population growth and fuel consumer spending.

Employers added 185,000 jobs a month on average this year, up from an average monthly loss of 5,000 in 2003. Plans for job cuts this year fell 19 percent through November from the comparable period a year earlier, according to a survey by Challenger, Gray & Christmas Inc., a Chicago-based placement firm.

U.S. companies with sales of $1 million to $1 billion are more optimistic about the economy than they were three months ago and plan to boost hiring, according to a survey by TEC International. Sixty-seven percent of the more than 2,300 executives polled Nov. 17 to Nov. 29 said economic conditions improved over the past year, and 58 percent expect them to be better in the next 12 months. That compares with 65 percent and 54 percent, respectively, in the poll taken Aug. 30 to Sept. 6.

`Beef Up'

``We're going to be increasing our employment this year, extensively around positions that can be revenue generating,'' said Robert Busch, chief executive of All-State International Inc. in Cranford, New Jersey, which makes stationery and legal forms for law firms and had $47 million in sales this year. ``We're going to beef up some of our marketing employment.''

Productivity, a measure of how much an employee produces for every hour of work, grew at the slowest rate in almost two years during the third quarter, a government report showed Dec. 7. That suggests companies are having difficulty squeezing more efficiency from workforces and may need to boost hiring, economists said.

``Intense international competitive pressures are forcing businesses to promote productivity gains, which have dampened hiring,'' said Steven Wood, president of Insight Economics LLC in Danville, California. ``As these efficiency gains slow, hiring should accelerate'' and help the expansion become self-sustaining.

There are signs that efforts to limit the effect of higher raw materials costs may also be keeping a lid on hiring.

Labor Costs

Labor costs rose 0.8 percent in the year through September, the biggest annual increase since the second quarter of 2001, the Labor Department reported Dec. 7. Crude oil prices on the New York Mercantile Exchange have risen by almost a third this year.

U.S. employers' announced plans to cut jobs rose 5.1 percent in November from the year-earlier month, led by reductions in government and the telecommunications and auto industries, according to the survey by Challenger, Gray & Christmas.

New York-based Colgate-Palmolive Co., the world's biggest toothpaste maker, plans to cut about 4,440 jobs, or 12 percent of its workforce, in a four-year program to boost earnings.

Oil prices on the New York Mercantile Exchange fell to an average closing price of $43.37 a barrel this month from a record $55.67 in October. Economists including John Silvia at Wachovia Corp. in Charlotte said hiring may accelerate as oil costs recede.

                  Bloomberg Survey

 FIRM                      Import  Jobless   Whlsle
                           Prices   Claims    Inv.
 ---------------------------------------------------
 Number of replies           42       41       33
 MEDIAN                     0.0%     335      0.5%
 AVERAGE                   -0.1%     336      0.5%
 High Forecast              0.5%     355      1.0%
 Low Forecast              -1.2%     325      0.0%
 Previous                   1.5%     349      0.5%
 ---------------------------------------------------
 ABN Amro                   0.0%     333      0.5%
 4CAST Ltd.                -1.1%     355      0.7%
 Action Economics           0.4%     335      0.6%
 AIG Global Invest.         0.1%     n/a      n/a
 AIB Global Treasury        0.3%     335      0.5%
 Argus Research Corp.       0.4%     n/a      0.4%
 BNP Paribas                0.3%     335      n/a
 B of A Capital             n/a      334      n/a
 Barclays Capital           n/a      340      n/a
 Bear Stearns              -0.3%     335      n/a
 Bank of Tokyo- Mitsub.    -0.5%     345      0.5%
 Briefing.com               n/a      335      0.8%
 CantorViewpoint           -0.2%     338      0.6%
 Citigroup                  0.2%     335      0.0%
 Commerzbank                n/a      335      n/a
 Credit Agricole           -0.1%     n/a      n/a
 Credit Suisse FB           0.1%     330      0.5%
 DekaBank                   0.0%     n/a      n/a
 Deutsche Bank Research    -1.0%     330      0.7%
 Exane                      n/a      335      n/a
 Fortis Bank NV            -0.3%     n/a      0.5%
 Griffin, Kubik, Stephens   0.5%     329      0.0%
 High Frequency Economics   0.0%     330      0.5%
 HBOS Treasury              0.5%     325      0.4%
 HSBC Markets               n/a      335      0.8%
 HypoVereinsbank            0.2%     330      n/a
 I.D.E.A.                  -0.5%     335      0.7%
 ING Financial Markets     -0.4%     n/a      0.5%
 Insight Economics         -0.3%     340      0.7%
 IntesaBci                 -0.6%     n/a      n/a
 J.P. Morgan               -0.2%     340      n/a
 JPMorgan Fleming           n/a      329      n/a
 Lehman Brothers            0.3%     335      0.7%
 Macroeconomic             -0.2%     340      n/a
 MCM Moneywatch             0.2%     337      0.7%
 Merrill Lynch             -1.2%     330      0.4%
 Mizuho Securities          n/a      330      0.4%
 Moody's                    0.0%     n/a      0.5%
 National City Bank         0.3%     n/a      n/a
 Nesbitt Burns             -0.2%     337      0.6%
 Nord/LB                   -0.2%     355      n/a
 Prebon Marshall           -0.5%     330      0.5%
 Ried, Thunberg & Co.       0.2%     335      0.5%
 Scotiabank Group           0.0%     335      0.5%
 Societe Generale           n/a      330      n/a
 Stone & McCarthy          -0.2%     340      0.6%
 Thomson/IFR                0.2%     342      0.5%
 UBS Securities LLC         0.0%     335      n/a
 Ulpia                      n/a      335      1.0%
 Wells Fargo                0.4%     n/a      n/a
 Westpac Banking           -0.3%     n/a      0.7%
 Wrightson                  0.2%     335      0.5%

To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net.

Last Updated: December 9, 2004 00:20 EST