Jobless claims fall; trade deficit narrows

Associated Press file photo -- A container ship from China is offloaded in July at the port of Boston. The U.S. trade deficit fell to its lowest level in two years in September on record exports.
Associated Press file photo -- A container ship from China is offloaded in July at the port of Boston. The U.S. trade deficit fell to its lowest level in two years in September on record exports.

The number of people seeking unemployment benefits fell last week by 8,000 to a seasonally adjusted 355,000, a possible sign of a healing job market. But officials cautioned that the figures were distorted by Superstorm Sandy.

In a separate economic report, the U.S. trade deficit declined to the lowest level in nearly two years because exports rose to a record high. The gain might not last given the global economic slowdown, analysts said.

The Labor Department said Thursday that the four-week average of applications, a less volatile measure, rose by 3,250 to 370,500.

The storm could affect weekly applications for up to four weeks, a Labor spokesman said.

Applications declined in one state last week because power outages prevented officials from receiving applications. The spokesman wouldn’t identify the state. The storm also pushed applications in other states up because some people who could not go to work sought benefits.

Most economists expect applications will rise in the coming weeks. Jill Brown, an economist at Credit Suisse, said that large hurricanes have historically pushed up applications by about 4 percent. That suggests they could reach 390,000.

If applications stay below 360,000 after the storm’s effects fade, it would be a good sign for the job market.

Weekly applications have fluctuated between 360,000 and 390,000 since January. At the same time, employers have added an average of nearly 157,000 jobs a month. That’s only been enough to lower the unemployment rate slowly. It has declined to 7.9 percent from 8.3 percent this year. And some of the decline was because more people gave up looking for work and weren’t counted as unemployed.

The number of people receiving benefits rose to nearly 5.1 million in the week ended Oct. 20, the latest data available. That’s about 42,000 more than the previous week.

There are some signals that the job market is improving. Employers added 171,000 jobs in October and hiring in August and September was much stronger than first estimated, the department said last week. The economy has gained an average of 173,000 jobs a month since July. That’s up from 67,000 a month in April through June.

Most economists expect growth will remain sluggish through early next year. Many hope the economy will accelerate if the White House and Congress avoid the so-called “fiscal cliff,” the package of tax increases and spending cuts scheduled to take effect early next year. If the cliff isn’t avoided, it could push the U.S. economy back into recession.

The trade deficit narrowed to $41.5 billion in September, the Commerce Department said Thursday. That is 5.1 percent below the August deficit and the smallest imbalance since December 2010.

Exports climbed 3.1 percent to an all-time high of $187 billion. That followed two monthly declines and reflected stronger sales of commercial aircraft, heavy machinery and farm goods.

Imports rose 1.5 percent to $228.5 billion. An increase in consumer goods drove the gain, including shipments of the new Apple iPhone5. Higher oil prices also contributed to the gain.

The narrower trade deficit could lead the government to revise July-September economic growth slightly higher than the 2 percent annual rate reported last month. That’s because U.S. companies earned more from overseas sales while consumers and businesses spent less on foreign products.

But economists cautioned that the increase in exports may only be temporary. One reason is soybean exports rose 32 percent in September from August, in part because of a jump in prices linked to the summer drought.

“More generally, export growth has slowed by more than import growth as the weak global backdrop has taken its toll,” said Paul Dales, senior U.S. economist at Capital Economics. “So while these data may boost third-quarter ... growth by a couple of tenths of a percent, further ahead net exports may not add anything to growth.”

Europe’s debt crisis and slower global growth in emerging markets had weakened demand for U.S. goods overseas in the previous months. That subtracted from economic growth in the third quarter.

Exports to the 27-nation European Union were unchanged in September from August. Exports to Latin America grew 4.2 percent, although exports to Brazil declined. Brazil is South America’s biggest economy.

So far this year, the U.S. deficit is running at an annual rate of $554 billion, slightly below last year’s $559.9 billion imbalance.

The U.S. deficit with China increased to $29.1 billion in September. It is running 6.8 percent ahead of last year’s record pace. America’s deficit with China last year was the highest imbalance ever recorded with a single country.