- ‘Tis the Season: London florist creates $4.6 million Christmas wreath
- No tailgating allowed at Super Bowl XLVIII
- Pentagon to transport African troops to Central African Republic
- Chinese man fed up with his girlfriend’s shopping jumps to his death
- Ukraine leader to talk with protesters; Washington urges caution
- Pope Francis: A nun saved my life
- Israeli P.M. Netanyahu backs out of Mandela funeral
- Elian Gonzalez makes first trip outside Cuba since custody battle
- U.S., British intelligence agents enter online sci-fi world to spy on gamers
- Sarah Palin to host the outdoors show ‘Amazing America’
Jobless claims, trade deficit decline
Dow, S&P 500 rise in reaction
The nation’s economic outlook improved Thursday as the government reported big drops in the nation’s trade deficit in July and a large decline in claims for unemployment benefits last week.
Investors were particularly focused on the jobs outlook, as weak growth in employment and incomes has stymied hopes for more vigorous growth in the economy. A recent trend of declining joblessness continued last week as the Labor Department said jobless claims fell by 27,000 to 451,000 - far more than the 2,000 decline economists expected. A four-week moving average of jobless claims fell to 477,750 from 487,000.
The Dow Jones Industrial Average shot up on the news, and the major U.S. stock indexes finished in positive territory for the day. The Dow Jones industrial average rose 28.23, or 0.3 percent, to close at 10,415.24, and the Standard & Poor’s 500 index rose 5.31, or 0.5 percent, to 1,104.18.
In another upbeat development, the nation’s trade deficit plunged 14 percent to $42.8 billion in July, as exports of airplanes surged and imports fell across the board, the Commerce Department reported. A big increase in the trade deficit had been a major drag on growth in the spring quarter, so the improvement in the trade deficit is a good portent for the soon-to-be-released numbers on economic growth in the summer quarter.
“The swing in net exports should stabilize growth” in the summer quarter, said Harm Bandholz, economist at Unicredit Markets. He estimated that in the April-June quarter, a big jump in imports shaved 3.4 percentage points off the U.S. rate of growth, depressing it to under 2 percent as demand for goods and services was satisfied in large part by imports from overseas.
But that surge in imports is now over, giving a boost of as much as a half a percentage point to the summer growth rate, he said.
The unusually large 3 percent jump in imports in both May and June was mostly a result of tax rebates the Chinese government provided to exporters during those months, prompting a scramble by Chinese exporters to take advantage of them, Mr. Bandholz said. The rebates expired in mid-July, so they should no longer distort the trade data, he said.
Also helping narrow the trade deficit, U.S. exports resumed their upward trend in July, growing by 1.8 percent. A declining dollar and robust growth in emerging markets such as China and Brazil have provided a powerful boost to exports of big-ticket equipment like tractors and airplanes in the last year.
The jobless claims numbers also heartened economists.
“Given the flood of soft economic data that we’ve seen in recent months, the continued improvement in jobless claims is encouraging, as it reinforces the reversal of the negative trend that had been in place,” said Jim Baird, a partner at Plante Moran Financial Advisors in Kalamazoo, Mich.
“However, we shouldn’t lose sight of the fact that the labor market is still exceptionally weak.”
A Labor Department official said the department had to estimate claims data for some states that had been unable to submit data owing to Monday’s Labor Day holiday.
Some have since submitted their data, and the official said the figures were close to the department’s estimates, indicating the data was unlikely to be revised significantly.
c This article was based in part on wire service reports.
© Copyright 2013 The Washington Times, LLC. Click here for reprint permission.
About the Author
- Inconvenient truth: China, developing world now biggest source of greenhouse gases
- U.S. unemployment falls to five-year low of 7 percent; 203K jobs added
- Economic growth jumped to 3.6 percent in summer
- Spending on social welfare rose as economy tanked during recession
- Treasury aims to sell off GM stock by end of year
Latest Blog Entries
By Brahma Chellaney
Beijing's creeping aggression signals a challenge to U.S. presence in the Asian Pacific
- Chinese man fed up with his girlfriend's shopping jumps to his death
- CURL: Obama tells a whopper on IRS scandal
- Satanists petition for statue at Oklahoma Statehouse
- Tech companies call for an end to NSA online snooping
- Lawmakers see 'false narrative' of Obama as a terrorist fighter
- Ted Cruz sees legal landmines ahead for Obamacare
- WOLF: The president's other Obamacare lies
- Obama lied about Syrian chemical attack, 'cherry-picked' intelligence: report
- MSNBC host: Obamacare a 'wealthy white men' racist word
- Mike Shanahan says he'd like to return to Redskins
Independent voices from the The Washington Times Communities
The world impacts us. What happens in our towns, cities, states, country and on this planet makes a difference to us.
Happiness is attainable. Morning to night. I love to teach, deal with folks that have an issue and really wish to tackle it and write.
Brazen, leading-edge, “call it like it is” columns and reporting from Ohio native, radio host and writer, Sara Marie Brenner.
White House pets gone wild!
Let it snow