The number of Americans filing new claims for jobless benefits slid last week to the lowest level in more than four and a half years,according to government data that may provide a boost to President Barack Obama a month before voters go to the polls.
The Labor Department report on Thursday was the latest data to suggest improvement in the jobs market,though the surprisingly large 30,000 drop in new claims may have reflected distortions due to seasonal adjustments that are likely to be smoothed out in coming weeks.
The overall trend seems to be that the labor market is improving,said Brian Kim,a currency strategist at RBS Securities in Stamford,Connecticut.
A Labor Department analyst said seasonal factors had predicted a very large increase in claims last week,which he said would be typical for the first week of the quarter. Unadjusted claims did rise,but far less than expected,resulting in the sharp drop in the seasonally adjusted figure.
He noted that one state reported a decline in claims last week when a rise had been expected. No states had been estimated for the report,he said.
We will likely see some payback in the claims data reported next week. But through this potential volatility,it does look like the trend in the claims is improving somewhat,said Daniel Silver,an economist at JPMorgan.
Silver said that California,given its large population and past massive swings in its claims data,was probably the state that caused the sharp drop in the seasonally adjusted figure.
But Pam Harris,director of the California Employment Development Department,said the state was not to blame.
Harris said California had reported all its unemployment insurance claims data on time. She said a published report stating it had not was incorrect and inaccurate.
A second Labor Department official said a processing issue resulted in the state,which he did not identify,reporting fewer claims than expected.
We cannot dictate to a state how they process their claims … This is one of the years they happened to be behind everyone else,he said,adding the Columbus Day holiday this week may have been one factor.
This individual state,whenever there are increases in claim,usually range from 15,000 to almost 20,000,he added.
The jobs data was tempered by a second report on Thursday that hinted at weaker US and global demand.
The US trade deficit widened in August to $44.2 billion,as US goods exports fell for the fifth consecutive month and imports declined fractionally.
Initial claims for state unemployment benefits fell to a seasonally adjusted 3,39,000,the lowest number of new claims since February 2008,about a year before Obama took office in the midst of the global financial crisis.
Economists polled by Reuters had forecast claims edging up to 3,70,000 last week.
Zach Pandl,strategist at Columbia Management in Minneapolis,said you do have to be cautious about possible distortions. But with that caveat,the jobless claims numbers have been modestly encouraging over the last few weeks.
The four-week moving average for new claims,a better measure of labor market trends,fell 11,500 to 364,000,the lowest in six months.
U.S. stocks rose in response to the jobs data,while Treasury debt prices slipped and the dollar was lower against a basket of currencies.
A government report on Friday showed employers added a modest 114,000 jobs to payrolls in September but the unemployment rate dropped sharply to 7.8 per cent,also the lowest level since Obama took office.
Former General Electric Chief Executive Jack Welch and others suggested last week the payrolls data was fixed to make Obama look better ahead of the election,a charge the Labor Department strongly denied.
Obama’s opponent,Republican Mitt Romney,has accused the president of mishandling the economy.
Thursday’s claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid fell to 3.27 million in the week ended Sept. 29,the latest data available. It was the lowest since May.
A Reuters poll on Thursday showed economists were slightly less optimistic about US growth,lowering their median growth forecasts to an annualized 1.6 per cent for the first quarter of 2013,compared to 1.7 per cent last month.
The group of more than 70 respondents also trimmed their second-quarter forecasts to 2.1 per cent from 2.3 per cent,suggesting the U.S. economy will continue its slow,steady plod despite a recession in Europe,a slowdown in China and more restrictive fiscal policy at home.
The monthly trade deficit increased to $44.2 billion in August,from an upwardly revised estimate of $42.5 billion in July,the Commerce Department said. Analysts were expecting an August trade gap of about $44.0 billion.
Overall U.S. exports dropped 1.0 per cent as troubles in Europe continue to weigh on global growth,while imports fell 0.1 per cent in a sign of faltering U.S. demand for consumer products,autos and capital goods.
It looks like net exports will contribute negatively to GDP (gross domestic product) growth,subtracting as much as half a percentage point,said Michael Moran,chief economist at Daiwa Securities America in New York.
A separate Labor Department report showed that overall U.S. import prices rose 1.1 per cent for the second consecutive month in September,while U.S. export prices rose 0.8 per cent.