US Jobless Claims Stay High; Trade Gap Remains Wide
fxbom.com
10:46 PM
WASHINGTON -(Dow Jones)- The number of people filing for unemployment benefits in the U.S. stayed high last week and the nation’s trade deficit remained large in August, highlighting the challenges faced by President Barack Obama in turning around the weak economy.
New jobless claims fell by only 1,000 to a seasonally adjusted 404,000 the week ended Oct. 8, the Labor Department said Thursday. That’s above the 400,000 level under which economists generally believe the jobs market is really starting to improve.
Meanwhile, the Commerce Department said the trade deficit stood at $45.61 billion in August, close to the $45.63 billion posted in July, as U.S. exports to and imports from the rest of the world both fell slightly. The data suggest trade may not add much to third-quarter economic growth.
The economy slowed in the first half of the year as higher gasoline and grocery prices and uncertainty about future jobs prospects hit already low consumer spending. After stalling during the summer, the economy should pick up some speed in the third quarter, but persistently high unemployment is seen keeping a lid on growth–and complicating Obama’s job.
The four-week moving average of new claims, a more reliable indicator of the labor market’s performance because it smoothes out volatile weekly figures, fell by 7,000 to 408,000 last week. Recent claim figures suggest the labor market is stabilizing after coming close to recession levels in the summer. Most companies appear to be in wait-and-see mode, reluctant to ramp up hiring but also loath to make big layoffs.
Thursday’s report showed the number of continuing unemployment benefit claims–those drawn by workers for more than a week–totaled 3,670,000 in the week ended Oct. 1. Continuing claims are reported with a one-week lag.
The number of continuing claims was down 55,000 from the prior week and is the lowest since April 16, which may signal an improvement. However, there is no way to know the reason for the decline, which could be due to people finding a job or because they have simply run out of benefit coverage.
Though U.S. employers continued to add some jobs in September, the labor market is growing too slowly to bring down the unemployment rate, which was stuck at 9.1% last month.
The Senate on Tuesday blocked President Barack Obama’s $447 billion jobs bill, highlighting the challenges he faces in tackling the labor market’s woes. Obama is having a bit more luck with trade, which he is counting on to help boost the economy. Congress Wednesday approved free-trade pacts with South Korea, Colombia and Panama. The deals are expected to generate $13 billion in new exports.
The trade numbers showed the deficit with China rose to $28.96 billion in August, a new record high, from $26.96 billion in July. The move is likely to fuel a push in Congress for legislation that would punish the Asian nation for its currency policies.
The U.S. Senate Tuesday voted in favor of legislation targeting China’s currency management. Domestic U.S. firms argue that Beijing’s policy of holding down the value of the yuan benefits China’s exporters by acting as a trade subsidy.
Globally, U.S. exports fell to $177.61 billion from $177.71 billion, while imports slipped to $223.22 billion from $223.33 billion.
The U.S. trade gap hit a two-and-a-half year high in June but has since narrowed with falling oil prices. Trade has been a drag on the U.S. economy through much of the recovery, though net exports did contribute a little to economic growth in the second quarter.
-By Luca Di Leo, Dow Jones Newswires; 202-862-6682; luca.dileo@dowjones.com
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