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U.S. jobless claims fall sharply to five-year low

WASHINGTON — The number of Americans filing new jobless benefits claims fell sharply last week to its lowest level since the early days of the 2007-09 recession, a sign the job market is still healing even though the economy remains weak.

Other data on Thursday showed a narrowing of the U.S. trade gap in March, although drops in imports and exports offered warning signs over the strength of domestic and foreign demand.

Initial claims for state unemployment benefits dropped 18,000 to a seasonally adjusted 324,000 last week, the Labor Department said.

The claims report runs counter to a growing number of signals that economic activity softened in March and April, a phenomena economists have dubbed the spring swoon because it also happened in the previous two years.

"Growth slowed between the first and second quarters, but the claims data suggest that the extent of this slowing was limited," said Daniel Silver, an economist at JPMorgan in New York.

The data on claims has no direct bearing on the Labor Department's monthly employment report for April due on Friday. However, it suggests employers are feeling less pressure to lay workers off, even if they have cut back on hiring.

"Layoffs (are) not an issue. Companies are reluctant to hire. This is keeping the jobs market in a rut," said Ryan Sweet, an economist with Moody's Analytics in West Chester, Pennsylvania.

Analysts had expected 345,000 new jobless claims last week, and the positive signal from the data sent U.S. stock prices higher, while yields on U.S. government debt rose. An interest rate cut from the European Central Bank also lifted investor sentiment.

Economists expect Friday's jobs report will show employers hired 145,000 people last month, an improvement from March's dismal pace of 88,000 but not enough to bring down the still-elevated jobless rate, which is seen steady at 7.6 percent.

Supporting the view that hiring picked up modestly, a survey of small businesses showed they added workers in April for the fifth straight month. Planned layoffs also fell.

The recent slowdown in the economy has been blamed on government belt-tightening, although analysts also think a mild winter followed by an unusually cold March may have led some employers and consumers to bring forward hiring and purchases.

TRADE DEFICIT NARROWS

Ongoing weakness in the labor market and a slowing in inflation led the U.S. Federal Reserve to keep its monetary spigots open on Wednesday following a two-day policy review. Policymakers said they could even step up bond purchases if the economy needed more help.

The level of claims last week was the lowest since January 2008, a month after the start of the worst recession in decades.

Separately, Commerce Department data showed the U.S. trade deficit shrank more than expected in March as exports fell and imports recorded their biggest drop since 2009, which could mean U.S. consumers are demanding fewer goods and services.

"It tells a sad tale of weakening growth momentum in both the U.S. and globally," said Millan Mulraine, an economist at TD Securities in New York.

Analysts at Capital Economics were more sanguine about the drop in imports, which they said could be a temporary factor related to the timing of a Chinese holiday that might have depressed the flow of goods out of the Asian giant.

Regardless, the narrowing of the trade gap to $38.8 billion suggests economic growth in the first quarter may have been a bit stronger than the 2.5 percent annual rate estimated by the government last week.

Comments

kevin 11 months, 3 weeks ago

where is the "sharply drop?" I don't believe a word coming from Washington or Chicago. Details of the "desired" results are incomplete.

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Why_not 11 months, 3 weeks ago

Any drop is good. It's amazing how some people "hope" for doom and gloom.

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R 11 months, 3 weeks ago

Not gloom and doom, just reductions in unemployment that are real and due to employment GROWTH - not just based on resources "leaving" the workforce...

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Jan 11 months, 3 weeks ago

And how much better these numbers would be if the Republicans had not continually blocked attempts to correct the layoffs caused by the sequester. Yes, the sequester was a by-partisan bill and the President and Democrats must share in the blame for getting us here, the Republicans are the ones that are blocking efforts to correct the situation, except for the FAA so they would not be inconvenienced when flying.

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R 11 months, 3 weeks ago

Really? The friggin thing hasn't even begun, much less to be reflected in figures that lag by months...

Please try again

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LilburnsFuture 11 months, 3 weeks ago

I agree. The sequester was Obama's white house Idea and was done by partisan politics. Now, if it was bi-partisan (full support from both Democrats and Republicans) I am not sure if many would agree. Now, let's recall that Democrats are still the majority in the Senate and still control the white house.

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Ashley 11 months, 3 weeks ago

If unemployment is so low; then why are Welfare cases through the roof? You cannot have one without the other???

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NewsReader 11 months, 3 weeks ago

...because critical thinking is not a part of their skill set.

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2006scionxa 11 months, 3 weeks ago

Employers are not hiring because obamacare is hanging over their head's. Its called a government mandate. When this economy starts producing 500,000-750,000 jobs a month then we will move foward. For those skeptics who say its not possible. Look to the Reagan recovery after the carter disaster. The right policies will work but obama will never implement them.

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Mack711 11 months, 2 weeks ago

Did they count the number that stopped looking for work and their Benefits have ended. NO! The true number of unemployed are much higher. Probalbly around 12 to 14%.

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