Washington - The number of Americans filing new claims for unemployment benefits rose more than expected last week, but the underlying trend continued to point to some strength in the labor market.
Initial claims for state unemployment benefits increased 16,000 to a seasonally adjusted 326,000, the Labor Department said on Thursday. Economists had forecast first-time filings for jobless aid rising to 317,000 in the week ended March 29.
The four-week moving average for new claims, considered a better measure of underlying labor market conditions as it irons out week-to-week volatility, hovered near six-month lows, indicating a firmer bias in the labor market.
“It's broadly consistent with moderate growth in the jobs market,” said Michael Hanson, a senior economist at Bank of America Merrill Lynch in New York.
Despite last week's increase, claims have been generally stable in March, which should support expectations of an acceleration in job growth during the month.
The government's closely watched employment report on Friday is expected to show nonfarm payrolls increased by 200,000 jobs last month after rising 175,000 in February, according to a Reuters survey of economists. The unemployment rate is seen falling one-tenth of a percentage point to 6.6 percent.
A report on Wednesday showed private employers stepped up hiring in March for a second straight month.
The labor market suffered a setback in December and January when unseasonably cold weather gripped large parts of the country. With temperatures rising, a pick-up is in the cards, which should help to unleash pent-up demand and put the economy on a stronger growth trajectory.
TRADE GAP
In a separate report, the Commerce Department said the trade gap increased 7.7 percent to $42.3 billion in February, the largest since September last year, as exports fell to their lowest level in five months.
January's shortfall was revised to $39.3 billion from a previously reported $39.1 billion.
“It should be a modest drag on first-quarter GDP,” said Pierre Ellis, senior global economist at Decision Economics in New York. “It's relatively strong on the U.S. side but the rest of the world is not helping.”
Economists had forecast the trade deficit falling to $38.5 billion. In addition to weak exports, February's rise in the deficit likely reflected an increase in the price of crude oil.
Declining petroleum imports as a domestic energy production boom reduces the nation's dependency on foreign oil have helped to shrink the trade deficit. That saw the current account deficit hitting a 14-year low in the fourth quarter of 2013.
Trade was one of the key drivers of economic growth during the last three months of last year, a trend that is unlikely to be repeated in the first quarter.
Growth in the first three months of 2014 is expected to have slowed to an annualized pace below 2 percent. The economy grew at a 2.6 percent rate in the fourth quarter.
When adjusted for inflation, the trade gap widened to $50.1 billion in February from $48.5 billion the prior month.
Exports slipped 1.1 percent to $190.4 billion in February. That was the lowest level since September. Imports edged up 0.4 percent to $232.7 billion.
Exports to China fell 4.6 percent in February. Imports from that country tumbled 19.5 percent, narrowing the politically sensitive U.S. trade deficit with the world's second-largest economy to its smallest since March 2013.
The drop in imports was probably due to the Chinese New Year holiday.
Reuters