The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting a pick-up in the labour market recovery and economic growth.
But the growth outlook was dimmed somewhat by another report on Thursday showing a widening in the trade deficit in January as imports rebounded.
Initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 340,000, declining for a second straight week, the Labor Department said, and confounding economists’ expectations for a rise to 355,000.
The four-week moving average for new claims, a better measure of labor market trends, also fell 7,000 to 348,750 – the lowest level since March 2008 – pointing to some firming in underlying labor market conditions.
“It’s once again supporting the thought that the economic recovery is strengthening,” said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York.
In a separate report, the Commerce Department said the trade gap rose to $44.45-billion (U.S.) in January from a shortfall of $38.14-billion in December.
U.S. government bond prices fell on the claims data, while the euro climbed to session peaks against the dollar.
A Labor Department analyst said no states had been estimated and there were no special factors influencing the report.
The claims data has no bearing on February’s employment report, due on Friday, as it falls outside the survey period.
According to a Reuters survey of economists, employers probably added 160,000 jobs to their payrolls last month, a small pick-up up from January’s 157,000 count. That would just be enough to hold the jobless rate steady at 7.9 per cent.
Economists say job gains of at least 250,000 per month over a sustained period are needed to significantly dent the ranks of the unemployed. Job growth averaged 200,000 in the last three months.
While layoffs have subsided, companies are not in a hurry to step up hiring as domestic demand remains lackluster.
Claims remain tucked in the low end of a 330,000 to 375,000 range for this year.
“The slow, steady improvement in claims is a good reflection of a better business environment,” said Joseph Trevisani, chief market strategist at Worldwidemarkets in Woodcliff Lake, New Jersey. “It has taken the jobless numbers a very long time to get to the point where historically managers begin to hire.”
A third report showed planned layoffs at U.S. companies rose for the second month in a row in February as the financial sector cut the most employees in over a year.
Employers announced 55,356 planned job cuts last month, up nearly 37 per cent from 40,430 in January, according to the report from consultants Challenger, Gray & Christmas, Inc.
High unemployment prompted the Federal Reserve last year to launch an open-ended bond buying program. The U.S. central bank said it would keep up the program until there was a substantial improvement in the outlook for the labor market.
In testimony to Congress last week, Fed Chairman Ben Bernanke signaled the central bank would press forward with plans to buy $85-billion in bonds per month.
The number of people still receiving benefits under regular state programs after an initial week of aid rose 3,000 to 3.1 million in the week ended Feb. 23. The four-week moving average of so-called continuing claims was the lowest since July 2008.