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US data shows econ recovery still on track
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WASHINGTON: New US claims for unemployment benefits fell more than expected last week to a two-month low, while the trade deficit narrowed sharply in July, hopeful signs for the stuttering economic recovery.
The data on Thursday helped to calm fears of a sharp slowdown in growth and implied the economy could start working its way out of a soft patch.
"The economy is not out of the woods with today's data, but things look better than they have in several weeks and there is no danger of a new downturn in activity," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.
Initial claims for state unemployment benefits dropped 27,000 to 451,000, the lowest since the week ended July 10, the Labor Department said. That was well below financial market expectations for 470,000.
Separately, the trade deficit shrank 14 per cent to $42.8 billion in July, smaller than the $47.3 billion gap that markets had expected. Analysts said that suggested the pace of economic growth would quicken in the third quarter.
Stocks on Wall Street rose on the data, while prices for safe-haven US government debt slipped. The dollar hovered near a 15-year low against the yen.
The US economy braked sharply in the second quarter, expanding at just a 1.6 per cent annualized rate, and soft data in recent months had fueled fears of a double-dip recession.
While the most recent signs have tamped down those fears, they likely come too late for the embattled Democratic Party ahead of the Nov. 2 congressional mid-term elections.
Opinion polls suggest voters, dissatisfied with President Barack Obama's handling of the economy, could punish Democrats and hand control of the House of Representatives, and perhaps even the Senate, to Republicans.
A weak labor market has been undermining the economy's recovery from its longest and deepest downturn in 70 years, but a few rays of light are starting to poke through the dark cloud of unemployment.-Reuters
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