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.