|US companies sold less to the rest of the world in June, widening the trade deficit the most since 2008. (Associated Press/File 2011)|
Jobless claims, at 4-month low, brighten outlook
WASHINGTON - After calamitous losses on Wall Street and fears of another recession, the economy got a dose of good news yesterday: The number of people applying for unemployment benefits fell below 400,000 for the first time since April.
Layoffs are easing in most states, and some economists are predicting mild improvement in job growth.
The brighter outlook was enough to catapult stocks. The Dow Jones industrial average closed up 423 points. Broader indexes also ended the day higher.
Weekly unemployment applications fell to a seasonally adjusted 395,000, the Labor Department said. They had been above 400,000 for the previous 17 weeks. The four-week average, a less volatile figure, fell to 405,000. That’s the lowest level since mid-April.
Steven Wood, chief economist at Insight Economics, said the declining trend in applications is an encouraging sign.
“Although the labor market also hit a ‘soft patch’ along with most of the rest of the economy during the spring and early summer, it now appears to be strengthening, at least a little, again,’’ Wood wrote in a research note.
Still, analysts responded with caution. Applications would have to fall below 375,000 to signal healthy job growth, a level not seen since February. And other data show the economy is struggling to grow.
The latest evidence of a slowdown came in a report that the US trade deficit grew in June to its widest since October 2008. The reason was that exports fell the most in more than two years.
A decline in exports follows recent reports showing consumers trimmed spending in June for the first time in nearly two years, manufacturers and service companies are struggling to grow, and the unemployment rate remains high at 9.1 percent.
The Federal Reserve warned this week that the US economy could be in for two years of weak growth. A dimmer outlook in the United States and growing worries Europe may not be able to contain its debt crisis have shaken global markets. The Dow has lost more than 12 percent since July 22. Some analysts worry that market turmoil could spook investors and consumers, causing them to further cut spending. That would stunt growth at a critical time.
The economy added 117,000 jobs in July, an improvement from the previous two months. But it’s far below the average of 215,000 per month from February through April.