October exports slide; jobless claims reach high

WASHINGTON - US exports slid to a seven-month low and the number of Americans filing first-time claims for unemployment benefits surged to the highest level since 1982, signaling the economy is shrinking even faster than previously estimated.

The October export slump, caused by recessions spreading through US trading partners, spurred an unexpected widening in the trade deficit to $57.2 billion, a Commerce Department report showed in Washington yesterday. The initial jobless claims - for the week ended Dec. 6 - rose to a 26-year-high of 573,000, more than forecast, the Labor Department said.

The worsening trade balance removes what had been a source of support for an economy that's been in a recession for a year, and the rising joblessness will be a further deterrent to consumer spending. The Bush administration said the labor report shows US senators should approve an emergency loan for automakers to prevent a bigger hit to jobs from that industry's collapse.

"We've yet to see the deepest monthly loss of jobs for the current recession, and that's somewhat frightening," John Lonski, chief economist at Moody's Capital Markets Group in New York, said in an interview. Payrolls may fall a combined 1.1 million in December and January, on top of the 533,000 drop in November, he said.

President-elect Barack Obama released a statement after the claims report urging President Bush to act quickly to rescue the ailing US carmakers.

The claims report "comes at a moment when our auto industry is struggling, threatening the jobs, healthcare, and pensions of not just thousands of American autoworkers, but dealers, suppliers and others all across America," Obama said. "Our government should provide short-term assistance to the auto industry to avoid a collapse."

American exports dropped 2.2 percent to $151.7 billion as foreign purchases of US aircraft, automobiles, chemicals, and food waned. The trade gap was projected to narrow to $53.5 billion, according to the median forecast in a Bloomberg News survey of 70 economists. The shortfall was $56.6 billion in September.

"Conditions are deteriorating at a fairly rapid pace globally," said Carl Riccadonna, a senior economist at Deutsche Bank Securities Inc. in New York.

Following the trade report, economists at Morgan Stanley in New York projected the economy would contract at a 6 percent annual pace this quarter, rather than 5 percent.

Imports declined 1.3 percent to $208.9 billion, the lowest level since March. Decreases in demand for foreign-produced automobiles, televisions, computers, and fuel reflected the worsening slump in US consumer and business spending.

Rather than helping shrink the trade gap last month, as most economists predicted, oil contributed to the deterioration. A record $15.56 drop in the price of imported crude in October was swamped by a 70.9 million-barrel jump in purchases that was also the biggest ever, the report showed. Excluding petroleum, the trade gap was little changed at $24.5 billion.

The initial jobless claims were estimated to rise to 525,000, according to the median projection of 39 economists.