US trade deficit narrows, economy resists global chill
Jobless claims fall 8,000 in latest week
The US trade deficit narrowed in September as exports increased, suggesting global demand for US goods was holding up despite the debt crisis in Europe.
Other data on Friday showed a drop in new claims for jobless benefits last week, although a severe storm distorted the data. The seasonally adjusted monthly trade gap fell to $41.55 billion (Dh152.4 billion), the smallest deficit since December 2010, the Commerce Department said. Analysts were expecting the trade gap would widen to $45.0 billion, and the decline suggested the US economic growth may have been faster in the third quarter than the 2.0 per cent annual rate initially reported. The data is the latest positive sign for the economy, which has appeared to perk up as consumers spend more freely and home construction quickens. Still, business investment sank in the third quarter, a sign companies lack confidence in the strength of the economic recovery. Also, a package of tax hikes and spending cuts planned for the new year could easily send the economy into recession.
In September, US exports rose 3.1 per cent, the biggest increase in more than a year. Exports to the European Union, where a debt crisis has pushed several countries into recession, were flat compared to the prior month, although the figures were not adjusted for seasonal swings.
US imports rose 1.5 per cent in September when seasonally adjusted. That also provided a positive sign for the economic outlook, as imports of consumer goods rose by $2.7 billion while imports of petroleum products fell.
The average price for imported oil rose in September to $98.88 per barrel, but the quantity of oil imports dropped. US stock index futures rose following the data’s publication, while prices for US Treasuries trimmed modest gains.
A separate report showed the number of Americans filing new claims for unemployment benefits fell last week, suggesting the labour market’s slow recovery was gaining traction although Superstorm Sandy roiled the data.
Initial claims for state unemployment benefits dropped 8,000 to a seasonally adjusted 355,000, the Labour Department said. That was below the median forecast in a Reuters poll of 370,000.
An analyst from the department said Sandy, a mammoth storm that slammed into the East Coast on October 29, boosted claims in some states by leaving people out of work, but also reduced claims in at least one state because power outages kept the state from collecting claim reports.
The impact of the storm is likely to be temporary. It was unclear if the storm’s net effect was to boost or reduce claims, the analyst said. He said the storm could continue to affect the claims report for several more weeks. “It is pretty difficult to interpret,” said David Sloan, an economist at 4Cast in New York. The storm killed at least 121 people in the United States and Canada and left more than 8 million homes and businesses without electricity in the Northeast.