March 5, 2021

Jobless Claims Decline to 4-Month Low

Initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 395,000, the Labor Department said, the lowest level since early April. Economists had expected a reading of 400,000.

“We are not necessarily on the verge of another dip in economic activity,” said Millan Mulraine, a senior macro strategist at TD Securities in New York.

“The level of claims at this point is more consistent with at least no deterioration in labor market conditions and at best an economy that is adding jobs at about 200,000” a month, Mr. Mulraine said.

But the optimism generated by the claims report was damped somewhat by a jump in the trade deficit to $53.1 billion in June, the largest since October 2008, from $50.8 billion in May.

As a result of the wider trade shortfall, economists estimated the government could lower the second-quarter’s already weak annual growth rate of 1.3 percent to 0.9 percent.

The government will release its second estimate for second-quarter gross domestic product on Aug. 26. The economy grew at a 0.4 percent rate in the first quarter.

The Federal Reserve said on Tuesday that economic growth was considerably weaker than expected and unemployment would fall only gradually.

Hiring accelerated in July after abruptly slowing in the previous two months. However, there are worries that a sharp sell-off in stocks and the fight between Democrats and Republicans over the government’s debt ceiling could curtail employers’ enthusiasm to hire new workers.

“The key point here is that a clear downward trend in claims has emerged in recent weeks, even as the debt ceiling chaos reached its peak,” said Ian Shepherdson, chief United States economist at High Frequency Economics in Valhalla, N.Y.

“We still need to see how the drop in stocks might feed back into claims, but with consumers’ spending accelerating in recent weeks, why would firms fire more people?”

An increase in the volume of oil imports pushed the monthly oil import bill in June to its highest since August 2008. That and the second consecutive month of declines in exports contributed to the wider trade deficit in June, the government reported.

Imports from China also rose nearly 5 percent to $34.4 billion, lifting the closely watched trade gap with that country to $26.7 billion, the highest in 10 months.

United States exports fell for a second consecutive month to $170.9 billion, as shipments to Canada, Mexico, Brazil, Japan, France, China and Central America all declined.

“The sharp drop in exports is a major concern for the economic outlook as it is an indication that the pace of global activity may be slowing appreciably,” Mr. Mulraine at TD Securities said.

Data on Wednesday showed China’s exports hit a record high in July as shipments to Europe and the United States proved surprisingly buoyant. July exports rose 20.4 percent from a year ago, the strongest gain since April.

Article source: http://feeds.nytimes.com/click.phdo?i=bd92881723fd4b08d46862b2dae05596

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