Jobs growth, trade data back US economic expansion
THE number of Americans filing new claims for jobless benefits fell last week while the trade deficit in June was the smallest in 1-1/2 years, hopeful signs for the struggling economy.
Initial claims for state unemployment benefits slipped 6,000 to a seasonally adjusted 361,000, the Labour Department said on Thursday, suggesting a modest improvement in the jobs market.
Economists polled by Reuters had forecast claims rising to 370,000 last week.
The four-week moving average of new claims, a better measure of labor market trends, rose 2,250 to 368,250.
A second report from the Commerce Department showed the shortfall on the trade balance narrowed 10.7 percent to $42.9 billion, the smallest since December 2010, as low oil prices curbed imports.
That was way below economists’ expectations for a $47.5 billion deficit. The petroleum import bill fell as the average price per barrel of crude oil dropped by the most since January 2009.
Paul Dales, senior economist at Capital Economics in Toronto, said the jobless claims data suggested labor market conditions were “fairly stable.” “The pick-up in jobs growth in July may therefore be sustained in August,” he said.
Nonfarm payrolls increased 163,000 in July, the most in five months, after three months of gains below 100,000. But the unemployment rate rose by a tenth of a percentage point to 8.3 percent.
Last week’s report was the first in several weeks not affected by auto plant shutdowns, which caused wide swings in claims in July, making it difficult to get a clean read of the jobs market.
Worries of deep government spending cuts and higher taxes scheduled to kick in at the turn of the year and Europe’s on-going debt crisis were making companies cautious about hiring new workers, economists say.
Stocks on Wall Street were little moved by the economic data as markets focused on Europe’s travails.
Benchmark Treasury debt yields hovered near twomonth highs, while the dollar rose against the euro.
“The good news is the narrowing of the trade deficit due to oil, which is indicating the economy has stabilised at a low level. Sluggish growth ahead, but no signs of recession,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
Exports increased 0.9 percent to a record $185 billion, while overall imports of goods and services declined 1.5 percent to $227.9 billion.
Trade subtracted almost a third of a percentage point from gross domestic product in the second quarter, according to the government’s estimate published last month. The economy grew at a 1.5 percent annual rate, slowing from the first quarter’s 2 percent pace.