Oct. 16 (Bloomberg) -- The number of Americans filing initial applications for unemployment benefits last week fell to the lowest in eight months, adding to signs the labor market may be starting to rebound, a government report showed.

First-time jobless claims fell to 384,000 during the week ended Saturday from a revised 388,000 a week earlier, the Labor Department said in Washington. The four-week moving average, a less volatile measure, declined to 390,750 from 395,000.

``The labor market is truly healing,'' said Anthony Chan, chief economist of Banc One Investment Advisors in Columbus, Ohio, before the report. ``Of course, healing doesn't mean it's flying, but it tells us for the rest of this year we are going to be seeing a more positive trend in payrolls.''

Companies including International Business Machines Corp. and Pfizer Inc. have announced plans to hire, suggesting the economy may start adding jobs after losing 2.6 million since President George W. Bush took office in January 2001. The economy generated 57,000 non-farm jobs in September, the first increase since January, the government reported earlier this month. The unemployment rate held at 6.1 percent.

Economists had estimated claims last week rose to 385,000, based on the median of 46 projections in a Bloomberg News survey, from the originally reported 382,000.

Last week was the third in the past four for claims to fall below 400,000, which some economists say is the dividing point between labor market expansion and contraction. Initial filings haven't been as low since 378,000 in the week ended Feb. 8.

The number of people continuing to collect state unemployment insurance jumped by 58,000 to 3.674 million in the week ended Oct. 4.

Insured Jobless Rate

The insured unemployment rate, which tends to move with the monthly jobless rate, held at 2.9 percent in the week before last. During that week, 37 states and territories reported an increase in new claims and 15 a decrease, with one unchanged.

``We're hiring,'' said Henry McKinnell, chief executive of Pfizer, the world's largest drugmaker, in an interview. ``All the way from biochemists to sales force.''

IBM, the world's biggest computer maker, said yesterday it will add 10,000 jobs next year in the U.S. and elsewhere as spending on information technology increases and the economy continues its recovery.

``The evidence is pointing to a much better and brighter and more robust jobs outlook,'' U.S. Treasury Secretary John Snow said yesterday in a radio interview with Bloomberg News.

The Federal Reserve may report today that production at the nation's factories, mines and utilities rose 0.4 percent last month as companies tried to keep pace with greater demand, based on the median of 72 estimates in a Bloomberg News survey of economists.

Job Cuts

Other companies continue to cut workers. Vector Group, the Miami-based holding company for cigarette maker Liggett Group Inc., said earlier this month it will close a plant in Mebane, North Carolina, and eliminate 150 jobs as sales continue to decline. Revenue fell 7.4 percent in the second quarter as smokers switched from brands including Eve and Liggett Select to lower-priced cigarettes. The job reductions equal about 14 percent of Vector's 1,100-employee workforce.

Alcoa Inc., the world's largest maker of aluminum, said yesterday it will reduce production at its smelter in Ferndale, Washington and cut 200 jobs because of high electricity prices. The company originally planned to shut the smelter completely this month and fire the 615 people who work there.

Last Updated: October 16, 2003 08:30 EDT