US unemployment figure falls to four and half year low
THE number of Americans filing new claims for unemployment benefits fell sharply last week to the lowest level in more than four and a half years, according to government data on Thursday that suggested improvement in the labour market.
The news could help President Barack Obama in his tight race for re-election on Nov. 6 against Republican challenger Mitt Romney, who says Obama has mishandled the economy.
But a second report released on Thursday hinted at weaker U.S. and global demand. The U.S. trade deficit widened in August to $44.2bn, as U.S. goods exports fell for the fifth consecutive month and imports declined fractionally.
Initial claims for state unemployment benefits fell 30,000 to a seasonally adjusted 339,000, the Labour Department said.
It was the lowest number of new claims since February 2008, about a year before Obama took office in the midst of the global financial crisis.
"This is a positive signal for the economy. The overall trend seems to be that the labour market is improving," said Brian Kim, a currency strategist at RBS Securities in Stamford, Connecticut.
A Labor Department analyst noted that seasonal factors had predicted a very large increase in claims last week, which he said would be typical for the first week of the calendar quarter. Unadjusted claims did rise, but far less than expected, resulting in the sharp drop in the seasonally adjusted figure.
The analyst cautioned against reading too much into one week's figure, and noted that one state had reported a decline in claims last week when an increase was expected. He said no states had been estimated for the report.
Still, economists said the labour market was showing signs of getting stronger.
Zach Pandl, strategist at Columbia Management in Minneapolis, said "you do have to be cautious about possible distortions. But with that caveat, the jobless claims numbers have been modestly encouraging over the last few weeks."
The prior week's figure was revised up to show 2,000 more new jobless aid applications than previously reported.
Economists polled by Reuters had forecast claims edging up to 370,0000 last week. The four-week moving average for new claims, a better measure of labour market trends, fell 11,500 to 364,000.
U.S. stocks opened higher, while Treasury debt prices fell after the data and the dollar extended gains against the yen.
Recent data on the U.S. labour market has been encouraging.
Employers added a modest 114,000 jobs to their payrolls in September, but the unemployment rate dropped sharply to 7.8pc, also the lowest level since Obama took office.
The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid fell to 3.27m in the week ended Sept. 29, the latest data available. It was the lowest since May.
The monthly trade gap increased to $44.2bn, from an upwardly revised estimate of $42.5bn in July, the Commerce Department said. Analysts were expecting an August trade gap of about $44bn.
Overall U.S. exports dropped 1.0 percent as troubles in Europe continue to weigh on global growth, while imports fell 0.1 percent in a sign of faltering U.S. demand for consumer products, autos and capital goods.
"It looks like net exports will contribute negatively to GDP (gross domestic product) growth, subtracting as much as half a percentage point," said Michael Moran, chief economist at Daiwa Securities America in New York.
Exports of oil, chemicals and other industrial supplies fell to the lowest level since February 2011, helping pull down the entire goods category, despite an increase in capital goods exports to the second-highest level on record.
Services exports defied the overall trend and rose to a record $52.8bn, due mostly to an increase in professional and business services and transportation.
Services imports also set a record, reflecting licensing fees to broadcast the Summer Olympic games in Britain.
The average price for imported oil rose slightly in August to $94.36 per barrel, helping to push the monthly oil import bill higher.
A separate Labour Department report showed that overall US import prices rose 1.1pc for the second consecutive month in September, while U.S. export prices rose 0.8pc.
Both increases were above expectations.
Analysts surveyed before the report had expected a 0.7pc increase in import prices and a 0.4pc rise in export prices.