Seasonally adjusted initial jobless claims fell 20,000 for a total 512,000 in the week ended Oct. 31, the U.S. Department of Labor reported Thursday. It was the lowest level of new claims since the first week of 2009 and bested the consensus estimate of economists, which called for 522,000 new claims.

The four-week moving average, which is indicative of the underlying trend in unemployed insurance claims, fell to 523,750, a decrease of 3,000 from the prior week.

Continuing claims, or the number of unemployed people still receiving insurance benefits, decreased 1.2 percent to 5.75 million from 5.82 million, seasonally adjusted. The four-week moving average for continuing claims was 5.89 million, also seasonally adjusted, a drop of 1.3 percent from 5.97 million.

“The big takeaway is the pace of layoffs is abating,” said Diane Swonk, chief economist with Mesirow Financial Inc. in Chicago. “We’re still losing jobs and need to see claims at 450,000 or below before we’re at a level that the net effect on the economy isn’t negative. We’re not there yet but we’re getting there.”

Swonk went on to say the decline in the four-week moving average shows the big picture is also improving.

“It shows us continued signs that things are getting better,” Swonk said. “Before you get more jobs, the turning point is when unemployment claims peak, and they peaked in the second quarter. They’ve been coming down ever since and that’s a precursor for hiring.

Unemployment claims peaked at 674,000 on March 27 of this year. They’ve fallen consistently since then, and Swonk believes that fact bodes well for future job growth.

“Job recovery has been slow, but I think there will be net positive job growth the rest of this year and in 2010,” Swonk continued. “It will be a trickle at first, but we’re starting to hit a tipping point where the workers we do have are working harder for less money. At some point, you can’t get blood from a turnip."

The monthly employment report for October, set to be released early Friday, is expected to show a rise in the unemployment rate to 9.9 percent from September’s 9.8 percent rate, according to Bloomberg LP. Economists surveyed by Bloomberg also predict that non-farm payroll jobs will decrease by 179,000, compared with a 263,000 decline in September.

The unemployment rate is tabulated through a survey of approximately 60,000 households, while the non-farm payroll figure comes from a survey of 375,000 businesses that also produces reports on the average workweek and average hourly earnings.