US jobless claims fall, trade deficit narrows on strong exports

WASHINGTON: The number of Americans filing for unemployment benefits fell more than expected last week, but the continued impact of Hurricanes Harvey and Irma on the data made it difficult to get a clear picture of the labor market.

Other data pointed to underlying economic strength despite the weather-related disruptions. The trade deficit narrowed in August as exports of goods and services rose to more than a 2½-year high, tempering expectations of a sharp slowdown in third-quarter GDP growth due to the storms.

Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 260,000 for the week ended Sept 30, the Labour Department said.

Harvey and Irma along with Hurricane Maria affected claims for Texas, Florida, Georgia, Puerto Rico and the Virgin Islands, a Labor Department official said. Economists had forecast claims falling to 265,000 in the latest week.

Claims shot up from a low of 236,000 in late August, hitting 298,000 at the start of September. As a result, Harvey and Irma are expected to cut into job growth in September.

According to a Reuters survey of economists, the Labor Department’s closely watched employment report on Friday will likely show that nonfarm payrolls increased by 90,000 jobs last month after rising by 156,000 in August.

The labour market disruptions are expected to be temporary, with the job market generally remaining strong.

Claims have now been below the 300,000 threshold, which is associated with a robust labor market, for 135 consecutive weeks. That is the longest such stretch since 1970, when the labor market was smaller.

Prices of US Treasuries were mixed in early morning trading while US stock index futures were slightly higher. The dollar rose against a basket of currencies.

In a separate report, the Commerce Department said the trade gap declined 2.7% to US$42.4bil, the smallest since September 2016. The department said the effects of Harvey, Irma and Maria would be ”embedded in source data” for trade, and the impact of the hurricanes will likely be “reflected in subsequent trade reports until normal trade activities resume in affected areas”.

Economists had forecast the trade shortfall narrowing to US$42.7bil in August. When adjusted for inflation, the trade deficit was little changed at US$61.8bil.

The so-called real trade deficit average for July and August was below the second-quarter average of US$62.4bil.

That suggests trade could contribute to gross domestic product in the third quarter and help to soften the economic blow of the hurricanes. The storms are expected to cut at least six-tenths of percentage point from economic growth in the third quarter.

Trade added two-tenths of a percentage point to the second quarter’s 3.1% annualised growth pace. In August, exports of goods and services increased 0.4% to US$195.3bil, the highest level since December 2014. Goods exports were the highest since April 2015. There were increases in exports of consumer and capital goods.