Steve Quayle News Alerts

Nov. 13, 2003
By Tim Ahmann

WASHINGTON (Reuters) - Record imports widened the U.S. trade deficit in September and last week's jobless claims stayed at a level suggesting an improving labor market, according to government reports on Thursday that offered more signs the economy has turned a corner.

The U.S. trade deficit widened to $41.3 billion as imports from China and the rest of the world rose to record levels, the Commerce Department said.

Separately, initial claims for unemployment aid rose 13,000 to 366,000 in the week ended Nov. 8 from a revised 353,000 the prior week, the Labor Department said.

While first-time filings climbed, a four-week moving average of initial claims -- which smoothes weekly volatility to provide a better view of labor-market trends -- dropped by 6,000 to 375,250. That marked its lowest level since early March 2001, when the economy tumbled into recession.

"The jobless claims numbers continue to hold at a comparatively low level," said Gary Thayer, chief economist at A.G. Edwards & Sons in St. Louis, Missouri. "We've probably seen the worst on the employment situation."

Both the trade and jobless claims data came in close to Wall Street's expectations, and the U.S. bond market showed little reaction, holding earlier gains. However, the dollar slid against the euro.

Economists said the September trade data would do little to change the government's estimate, issued late last month, that third quarter U.S. gross domestic product surged ahead at a 7.2 percent annual rate, the strongest performance in nearly two decades. An updated GDP estimate is due in late November.

IMPORTS SURGE, CLAIMS EDGE UP

The trade deficit widened for the first time in six months as surging imports outstripped the biggest increase in exports in over three years, the Commerce Department said.

Imports of goods and services totaled $127.4 billion. The 3.3 percent jump was led by higher imports of cars, auto parts and capital goods. Imports of services also set a record at $21.1 billion.

Although overshadowed by the record imports, exports jumped to $86.2 billion in September, the highest since May 2001. The 2.8 percent month-to-month gain was the biggest since June 2000. Services exports set a record at $26.3 billion.

The politically sensitive U.S. trade deficit with China also hit a record in September at $12.7 billion, as imports from the Asian giant hit $14.8 billion, another record.

The surge in imports offered a fresh signal of the degree to which demand has risen recently in the United States.

The strengthening economy has finally given a boost to the long-slumping U.S. jobs market. Last week, the Labor Department said U.S. employers added 286,000 workers to their payrolls over the last three months, the best three-month performance since before the economy entered recession.

And Thursday's figures on jobless claims contributed to a picture of a healthier labor market.

Initial claims have now held below 400,000, which economists view as a divide between a deteriorating and improving jobs market, for six straight weeks.

In addition, the four-week moving average has moved lower for three weeks, suggesting a surprise plunge in claims in the Nov. 1 week was not an aberration.

However, the total number of unemployed workers who continued to draw benefits after filing an initial claim rose by 49,000 to 3.53 million in the week ended Nov. 1, the latest week for which figures are available.

Still, a four-week average of that barometer fell to its lowest level since late March.

A third government report showed a 0.1 percent rise in import prices last month as oil prices climbed 2.3 percent. Without the increase in petroleum prices, import prices would have slipped 0.1 percent.

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