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WASHINGTON: 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 Labour Department report yesterday 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 Labour 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. The jobs data was tempered by a second report yesterday that hinted at weaker US and global demand. The US trade deficit widened in August to $44.2bn, 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 339,000, 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 370,0000 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 labour market trends, fell 11,500 to 364,000, the lowest in six months. A government report showed employers added a modest 114,000 jobs to their payrolls in September, but the unemployment rate dropped sharply to 7.8 percent, also the lowest level since Obama took office.
Yesterday’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 September 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 annualised 1.6 percent for the first quarter of 2013, compared to 1.7 percent last month.
The group of more than 70 respondents also trimmed their second-quarter forecasts to 2.1 percent from 2.3 percent, suggesting the US 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 gap increased to $44.2bn in August, from an upwardly revised estimate of $42.5bn in July, the Commerce Department said.