Weekly Jobless Claims Fall, Weak Exports Push Up Trade Deficit

weekly jobless claims
LM Otero/AP
By Lucia Mutikani

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

Other data released Thursday showed a weakening in exports in December, which if it extends to January could see trade being a drag on growth in the first quarter after it helped to buoy the economy in the last three months of 2013.

"The underlying economic trend is still positive," said Craig Dismuke, chief economic strategist at Vining Sparks in Memphis, Tenn.

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 economist expectations for a fall to 335,000 in the week ended Feb. 1.

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

The dollar extended gains against the euro and was little changed against the yen after the claims data, while U.S. Treasury debt prices fell and stock index futures rose.

Hiring is expected to have accelerated in January after being held down by unseasonably cold weather the prior month. Nonfarm payrolls likely increased 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 percent.

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

But economy could lose some support from trade. In a separate report,
the Commerce Department said the trade deficit increased 12 percent 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 prior month.

The 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 percent 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 such as China. December's fall in exports could bolster that view.

In December, exports dropped 1.8 percent to $191.3 billion. However, petroleum exports hit a record high in December. Imports edged up 0.3 percent 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 percent annual rate after increasing at a 3.6 percent pace in the third quarter. Economists polled by Reuters had forecast productivity, which measures hourly output per worker, rising at a 2.5 percent rate in the last three months of 2013.

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

Unit labor costs -- a gauge of the labor-related cost for any given unit of output -- fell at a 1.6 percent rate in the fourth quarter, showing weak wage-related inflation pressures in the economy. Unit labor costs fell at a 2 percent rate in the third quarter.

Economists polled by Reuters had expected unit labor costs to fall at a 0.5 percent pace in the fourth quarter. Labor costs were down 1.3 percent from the year-earlier period. They were up 1 percent in 2013, the weakest reading since 2010.


Increase your money and finance knowledge from home

Introduction to Value Investing

Are you the next Warren Buffett?

View Course »

Forex for Beginners

Learn about trading currencies and foreign exchange transactions

View Course »

Add a Comment

*0 / 3000 Character Maximum

1 Comment

Filter by:
premps

Ihope this comment will go to Daily Finance. Why have you ruined the working system where we could list our accounts & portfolios. Please remember a basic rule " if it is working, donot tinker with it least you may destroy it." Now I hav to go to different program or web site to store my information. Also I will like to know the name of The smart one , who has upset a good working program.

February 06 2014 at 5:23 PM Report abuse +1 rate up rate down Reply
unitedpaintings

Hiring is down in January because of the Polar Vortex, Feb will be snowstorms, Mar will be rain showers and so on. When is the Chief Liar going to take responsibility.

February 06 2014 at 12:34 PM Report abuse rate up rate down Reply
createidea

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

LOL !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

February 06 2014 at 10:30 AM Report abuse +1 rate up rate down Reply
1 reply to createidea's comment
pgile

I hope you're just copying and pasting this comment week after week. If not, your mind is stuck along with the !-key. Ironic, that screen name.

February 07 2014 at 8:28 AM Report abuse rate up rate down Reply
cvanac8550

Anyone see the story about celebrities comming out agains TPP because they want language in it to protect dolphins for the Japanese hunting season..{Huf post}....What a plant story...Imagine the most unbalanced trade agreement to ever come out of Washington is being minimilized by making it sound like Dolphins are the main issue with the agreement.
I can't post on Huff post because I refuse to have to log on with a social network acct.. The American people need to be told what this TPP agreement means to our country.
Obomber the corporatist hack is trying to destroy what little rights we have left such as eminent domain and hand it over to foreign interests.....This agreenment is so secretive even the hacks in congress hvar been left out of the loop......It's not about hateing it's about what a sell out this president really is.........

February 06 2014 at 9:26 AM Report abuse +1 rate up rate down Reply