THE NUMBER of Americans claiming new jobless benefits fell to a four-month low last week, a sliver of hope for an economy battered for days by a credit rating downgrade and falling share prices.
The jobless claims data released by the labour department yesterday eased concerns that the economy was heading back into recession, as feared by investors, and buoyed US stocks.
Initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 395,000, the department said, the lowest level since early April. Economists had expected a reading of 400,000.
“We are not necessarily on the verge of another dip in economic activity,” said Millan Mulraine, a senior macro strategist at TD Securities in New York.
However, the optimism generated by the claims report was dampened somewhat by a jump in the trade deficit to $53.1 billion in June, the largest since October 2008, from $50.8 billion in May.
As a result of the wider trade shortfall, economists estimated the government could lower the second-quarter’s already weak annual growth pace of 1.3 per cent to 0.9 per cent.
The government will release its second estimate for second-quarter gross domestic product on August 26th. The economy grew at a 0.4 per cent rate in the first quarter.
Economists remain cautiously optimistic that the world’s largest economy will avoid a double-dip recession, citing declining energy prices and the unwinding of supply chain disruptions from the earthquake in Japan. – (Reuters)
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