The number of Americans claiming new jobless benefits dropped to a four-month low last week, a sliver of hope for an economy that has been battered by a credit rating downgrade and falling share prices.
Initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 395,000, the Labor Department said today, the lowest level since the week ended April 2nd. That was below economists' expectations for a reading of 400,000.
But the optimism generated by the claims report was dampened somewhat by a surprise widening in the trade deficit in June. The June trade deficit jumped to $53.1 billion, the largest since October 2008, from $50.8 billion in May.
The wider trade shortfall could cause second-quarter's 1.3 per cent annual growth pace to be revised lower.
US stock index futures pared losses on the claims data, while the dollar extended gains against the euro.
The Federal Reserve said on Tuesday economic growth was considerably weaker than expected and unemployment would fall only gradually. The US central bank promised to keep interest rates near zero until at least mid-2013.
Hiring accelerated in July after abruptly slowing in the past two months. However, there are worries that a sharp sell-off in stocks and a nasty fight between Democrats and Republicans over raising the government's debt ceiling could dampen employers' enthusiasm to hire new workers.
The continued improvement in the labour market could help to allay fears of a new recession, which have been stoked by the economy's anemic growth pace in the first half of the year.
A Labor Department official said there was nothing unusual in the state-level claims data, adding that only one state had been estimated.
The four-week moving average of claims, considered a better measure of labour market trends, slipped 3,250 to 405,000. Economists say both initial claims and the four-week average need to drop close to 350,000 to signal a sustainable improvement in the labour market.
The number of people still receiving benefits under regular state programmes after an initial week of aid dropped 60,000 to 3.69 million in the week ended July 30th.
The number of Americans on emergency unemployment benefits fell 26,309 to 3.16 million in the week ended July 23rd, the latest week for which data is available.
A total of 7.48 million people were claiming unemployment benefits during that period under all programmes, down 89,945 from the prior week.
Reuters
