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Unemployment aid hits 7-month low; trade gap falls
Question of the Day
WASHINGTON (AP) — The outlook for American jobs and trade looked a little brighter Thursday, despite growing uncertainty overseas.
The number of people who applied for unemployment benefits last week fell a seasonally adjusted 390,000, the Labor Department said Thursday. That’s the fewest since April.
The U.S. trade deficit narrowed to $43.1 billion in September, its lowest point of the year, the Commerce Department said. Foreign sales of American-made autos, airplanes and heavy machinery pushed exports to an all-time high.
The data suggest layoffs are easing and the economy grew slightly better over the summer than the government had estimated a month ago.
Stocks rose sharply one day after the market tumbled over concerns that Europe’s debt crisis could worsen.
The Dow Jones industrial average gained more than 140 points in the first half hour of trading. Broader indexes also increased.
The reports “are modestly strong relative to expectations — encouraging confidence that the economy is gaining a bit of momentum,” said Pierre Ellis, an analyst at Decision Economics.
Weekly applications for unemployment benefits have declined in three of the past four weeks, the Labor Department said. The four-week average, a less volatile measure, fell to 400,000, also the lowest point since April.
The downward trend in applications suggests businesses are laying off fewer workers. Still, applications need to consistently drop below 375,000 to signal sustained job gains. They haven’t been at that level since February.
“The labor market is still weak and quite stagnant but there are hopeful signs of some modest improvement,” said Steve Wood, chief economist at Insight Economics.
In September, exports increased 1.4 percent to a record $180.4 billion, reflecting a big increase in shipments of U.S. made autos and auto parts, the Commerce Department said. Imports were up a smaller 0.4 percent to $223.5 billion. Oil imports slowed after huge gains earlier in the year.
The deficit has narrowed for the last three months.
Paul Dales, senior U.S. economist at Capital Economics, said the lower trade deficit in September could boost growth in the July-September quarter to an annual rate of 2.8 percent, up from the government’s initial estimate of 2.5 percent.
Still, Europe’s debt crisis could push that region into a recession next year, which could reduce demand for American exports and U.S. slow growth.
A higher deficit acts as a drag on economic growth because it means fewer jobs for American workers.
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