SAN FRANCISCO — Google Inc. shifted into a higher gear in the third quarter and began to leave the recession behind as the 11-year-old Internet search leader recorded its highest profit ever.

The results released yesterday are the strongest indication yet that the Internet advertising market is bouncing back from its worst funk since the dot-com bust at the start of the decade.

Google is considered a good barometer for the state of Internet commerce because its search engine is the hub of the Web's largest advertising network.

JOBLESS CLAIMS EASE IN SEPTEMBER

WASHINGTON — New jobless claims dropped to the lowest level since January and the prices of many household goods stayed low last month, signs of stability for the fledgling economic recovery.

The decline in jobless claims shows companies are cutting fewer workers, though the drop isn't yet steep enough to signal new hiring, economists said. And the low level of inflation is holding down prices as Americans slowly regain their appetite to shop despite rising unemployment and tight credit conditions.

Low inflation is consistent with the early stages of an economic recovery, Baumohl said. Even as business activity picks up, unemployment is still high and factories have enough spare capacity to increase output without boosting prices.

IBM PREDICTS HIGHER EARNINGS

SAN FRANCISCO — IBM Corp. has jacked up its profit guidance for the second time this year, a sign of the company's confidence that it can uncork more profit from its business despite falling sales.

The company's third-quarter results, reported after the market closed yesterday, indicate that corporations are still reluctant to spend on some kinds of technology. IBM's sales fell 7 percent, and all its major divisions suffered declines. IBM's profit was up 14 percent for the quarter.