U.S. Trade Deficit Narrows as Exports Climb

Other data released on Thursday showed a drop in new claims for unemployment benefits last week, although a storm that battered the East Coast distorted the figures.

The trade deficit shrank 5.1 percent to $41.55 billion, the smallest shortfall since December 2010, the Commerce Department said. Economists had expected it to widen to $45 billion.

Exports jumped 3.1 percent, the biggest increase in over a year. The gain more than offset a 1.5 percent increase in imports that was centered on purchases of consumer goods.

The report provides the latest positive sign for the American economy, which has appeared to pick up as consumers spend more freely and home construction quickens.

“This was a very encouraging report as the improvement in both export and nonpetroleum import activity suggest improving demand both domestically and globally,” said Millan Mulraine, an economist at TD Securities.

Chinese demand for American products appeared to help exporters in September. China bought $8.8 billion in American goods and services, up 0.3 percent from a month earlier, although those figures were not seasonally adjusted.

Exports to the European Union, where a debt crisis has pushed several countries into recession, were flat. The government does not seasonally adjust figures for countries and regions as it does for overall imports and exports.

The larger-than-anticipated decline in the trade gap suggests that American economic growth may have been higher in the third quarter than the 2.0 percent annual rate initially reported.

Like the gain in exports, the rise in imports provided a positive signal for domestic demand, even though imports subtract from economic growth. Imports of consumer goods rose by $2.7 billion.

Analysts said a good deal of the increase reflected imports of Apple’s iPhone 5. That suggested the increase might be temporary.

A separate report showed the number of Americans filing new claims for unemployment benefits fell last week, although Hurricane Sandy made the data difficult to interpret.

Initial claims for state jobless benefits dropped 8,000 to a seasonally adjusted 355,000, the Labor Department said. That was below the median forecast of 370,000 in a Reuters poll of economists.

An analyst from the Labor Department said that the storm, which slammed into the Eastern seaboard on Oct. 29, increased unemployment claims in some states by leaving people out of work, but that it also reduced claims in at least one state because power failures kept it from collecting claim reports.

The four-week moving average for jobless claims, which smooths out volatility, rose 3,250 to 370,500. Economists think readings below 400,000 generally point to rising employment.

Article source: http://www.nytimes.com/2012/11/09/business/economy/us-trade-deficit-narrows-as-exports-climb.html?partner=rss&emc=rss