Concerns ease as jobless benefit claims dip in US
THE number of Americans applying for jobless benefits edged down last week, easing concerns the labour market was deteriorating after weak employment growth in April.
Another report also published yesterday showed the US trade deficit widened in March, with exports surging to a record high and a rise in imports highlighting the economy's firming underlying demand.
Together, the reports indicated the economy remains on a moderate growth path, despite the softer jobs growth and signs the service sector slowed in April.
"The slowdown we have seen in economic activity and employment growth during the past two months may be in the rear view mirror," said Millan Mulraine, senior macro strategist at TD Securities in New York.
New claims for state unemployment benefits slipped 1,000 last week to a seasonally adjusted 367,000, the labour department said.
Economists who had expected claims to rise to 369,000 said the decline suggested seasonal distortions that had led to a spike in applications last month was probably over.
Separately, the trade gap widened 14.1pc to $51.8bn (€40bn) in March, the biggest jump in nearly a year, as a surge in imports swamped a rise in exports, which hit a record high.
Imports grew 5.2pc, the biggest gain since January. That jump was consistent with a rise in consumer spending seen during the first quarter.
Exports had another good month, rising 2.9pc, suggesting the global economy had not slowed as much as people had feared.
While a widening trade deficit is a drag on gross domestic product, the details of the trade report were broadly in line with the government's assumptions when it made its first GDP estimate last month.
Still, the government's gauge of first-quarter GDP growth is expected to be lowered to an annual pace of about 1.9pc from 2.2pc because of a smaller-than-expected rise in wholesale inventories in the March report.
The claims data and bargain-hunting helped to lift US stocks in early morning trade. US Treasury debt prices fell, while the dollar was little changed against a basket of currencies.
Coming on the heels of April's sluggish employment gains, the claims data calmed fears the labour market was stagnating.
Companies added a meagre 115,000 new jobs to their payrolls in April, the fewest in six months, the Obama administration said last Friday.
Most economists have viewed the pull-back in job creation as payback for stronger activity during the unusually warm winter and believe the underlying pace of payrolls growth is around 175,000 a month -- its average for the past three months.