New unemployment claims drop, exports rise

The number of people who filed new claims for unemployment benefits fell in the latest week, reversing a recent run-up that stoked concerns of a weakening job market.

Also Thursday, the Commerce Department reported that the U.S. trade deficit dropped sharply in July as exports rose, a positive indicator. Although the economy is still weak and jobs are hard to find, the data are the latest in a string of reports that have eased concerns of a double-dip recession.

New unemployment applications shot as high as 504,000 in mid-August, but this week’s number is more than 10% lower at 451,000, according to Labor Department data.

One potentially big caveat about the jobs data is distortion caused by the Labor Day holiday. California and Virginia supplied estimates instead of actual data, while the federal government estimated the claims of seven other states.

Yet even with the larger-than-expected drop, claims are no lower than they were at the end of 2009. The number of new filings each week has hovered around 450,000 the entire year.

“Given the weakness in the labor market, we welcome any sign of improvement in the pace of layoffs, but this figure should be taken with a grain of salt,” economist Omair Sharif wrote in a report.

More encouraging: The report that U.S. goods sold abroad in July rose to an almost two-year high. Imports also fell.

The trade gap dropped to $42.8 billion from $49.8 billion, reversing a sharp increase in June, the Commerce Department said. Economists surveyed by MarketWatch had forecast that the trade deficit would fall slightly to $47 billion.

Exports increased 1.8% to $153.3 billion — the highest level in one year — while imports declined 2.1% to $196.1 billion.

Most of the pullback in the trade deficit stemmed from higher exports of manufactured goods such as aircraft and computers.

“The rise in exports supports the view that the recovery in manufacturing is alive and well, while the decline in imports suggests that the consumer is still focused on boosting savings, not spending,” economist Steven Ricchiuto of Mizuho Securities wrote in an e-mail.

Mantell and Bartash write for MarketWatch.com/McClatchy.