US jobless claims fall, weak exports push up trade deficit

Thursday 06 February 2014 18.16
US exports tumbled 1.8% in December
US exports tumbled 1.8% in December

The number of Americans filing new claims for unemployment benefits fell more than expected last week, in a boost to the labour market outlook and the broader economy.

Other data today showed a weakening of exports in December, which if it extends to January could see trade being a drag on growth in the first quarter.

This comes after trade helped to buoy the economy in the last three months of 2013.

Initial claims for state unemployment benefits declined 20,000 to a seasonally adjusted 331,000, the Labor Department said. That was a bit lower than economists' expectations for a fall to 335,000 in the week ended February 1.

The data has no bearing on January's employment report, which will be released tomorrow, as it falls outside the survey period. But it still bodes well for the jobs market.

US hiring is expected to have accelerated in January after being held down by unseasonably cold weather the prior month.

Non-farm payrolls are expected to have increased by 185,000 last month, up from December's tepid 74,000 count, according to a Reuters poll of economists. The unemployment rate is forecast to hold steady at a five-year low of 6.7%.

That would be confirmation that the US economy continued to expanded after robust growth in the second half of 2013, which was driven by consumer spending, inventory accumulation and trade.

But the economy could lose some support from trade. In a separate report, the Commerce Department said the trade deficit increased 12% to $38.7 billion in December as exports recorded their largest decline since October 2012.

When adjusted for inflation, the trade gap rose to $49.5 billion in December from $45 billion the previous month.

The US government in its first estimate of fourth-quarter GDP last week cited trade as one of the key contributors to the economy's 3.2% annual growth pace during the period.

Trade added 1.33 percentage points to fourth-quarter GDP growth as exports expanded at their quickest pace in three years and imports slowed.

There are, however, doubts that the robust export growth pace can be sustained in light of slowing growth in markets like China. December's fall in exports could bolster that view.

In December, exports dropped 1.8% to $191.3 billion. However, petroleum exports hit a record high in December.

Imports edged up 0.3% to $230 billion in December. Imports of consumer goods hit a record high, but the impact was limited by a fall in the average price of imported crude oil, which hit its lowest level since February 2011.

The economy's solid performance in the fourth quarter was mirrored by sturdy gains in productivity.

In another report, the Labor Department said productivity rose at a 3.2% annual rate after increasing at a 3.6% pace in the third quarter.

Economists polled by Reuters had forecast productivity, which measures hourly output per worker, rising at a 2.5% rate in the last three months of 2013.

Still, the underlying trend remained soft, with productivity increasing 1.7% compared to the same time in 2012. For all of 2013, productivity increased 0.6%. That was the smallest gain since 2011 and compared to a 1.5% rise in 2012.