WASHINGTON (AP) -- The number of Americans seeking unemployment aid fell last week to seasonally adjusted 324,000, the lowest since January 2008. The drop points to fewer layoffs and possibly more hiring. Meanwhile, the U.S. trade deficit narrowed in March for a second month as the daily flow of imported crude oil dropped to the lowest level in 17 years.
The Labor Department says weekly applications fell 18,000, the second straight sharp drop. The four-week average, a less volatile measure, plummeted 16,000 to 342,250.
Applications are a proxy for layoffs. But fewer job cuts are only one side of the equation: Companies also need to be confident enough to add workers for job growth to pick up and lower the unemployment rate.
Economists forecast that the economy added 160,000 jobs last month. That's much better than the 88,000 added in March, but below last year's pace of nearly 185,000 per month. The unemployment rate is expected to remain unchanged at 7.6 percent.
The government will release the April employment report Friday.
Weekly applications at or below 350,000 are generally consistent with moderate hiring. But other reports have signaled a worsening jobs picture.
On Wednesday, payroll provider ADP said companies added just 119,000 jobs in April. And a survey of manufacturers by the Institute for Supply Management found that a measure of employment fell sharply last month.
Many companies have been advertising more jobs but have been slow to fill them. Job openings jumped 11 percent during the 12 months that ended in February, but the number of people hired declined, according to a Labor Department report last month.
Across-the-board government spending cuts and higher taxes may be making businesses more cautious about hiring. And an increase in Social Security taxes could slow consumer spending. The Federal Reserve said Wednesday that those policy changes are "restraining economic growth."
Still, consumers are more optimistic that the job market is healing and will deliver higher pay later this year, according to a survey of April consumer confidence released this week. And lower gas prices could offset some of the pinch from the tax increase.
The economy grew at an annual rate of 2.5 percent from January through March, the government said last week. That was an improvement from the anemic growth of 0.4 percent in the final three months of last year. Most economists expect growth will slow in the current quarter to 2 percent or lower.
TRADE DEFICIT
The U.S. trade deficit narrowed in March for a second month as the daily flow of imported crude oil dropped to the lowest level in 17 years. The deficit with China hit a three-year low.
The trade deficit decreased to $38.8 billion, an 11 percent drop from February's $43.6 billion, the Commerce Department reported Thursday.
Exports fell 0.9 percent to $184.3 billion as sales of machinery, autos and farm products all declined. Imports fell 2.8 percent to $223.1 billion, led by a 4.4 percent drop in foreign petroleum. Crude oil imports averaged just 7 million barrels per day, the lowest since March 1996.
A smaller trade gap can boost overall economic growth as American companies earn more from overseas sales while U.S. consumers and businesses spend less on foreign products.
For the first three months of this year, the trade deficit is running at an annual rate of $507.7 billion, 5.9 percent below last year's deficit of $539.5 billion. Economists are looking for the deficit to narrow slightly this year, in part because they expect continued gains in U.S. exports.
The politically sensitive deficit with China shrank 23.6 percent in March to $17.9 billion, still far above the imbalance with any other country.
The deficit with the European Union grew 13 percent in March to $9.9 billion even though U.S. exports to the region rose 14.4 percent. But for the year, U.S. exports to Europe are down 8 percent compared to the same period in 2012, reflecting the impact of a recession in the 17 European Union countries that use the euro.
The European Central Bank announced Thursday that it was cutting its benchmark interest rate to a new record low in an effort to stimulate growth in the 17 European countries that use the euro currency.
The Institute for Supply Management reported Wednesday that its index of U.S. manufacturing activity expanded at a slower pace in April, held back by weaker hiring and less company stockpiling. That raised worries that overall economic growth may slow this spring.
The manufacturing index slipped to 50.7 in April. That's down from 51.3 in March and the slowest pace this year. A reading above 50 indicates expansion. A measure of export orders in the ISM survey grew at a slower pace in April.
Exports of industrial machinery, telecommunications equipment, computers, autos and farm products such as soybeans were all down in March although sales of civilian aircraft were up.
Imports of foreign-made autos dropped by $771 million in March and imports of toys and games were down $1 billion.
The overall economy grew at an annual rate of 2.5 percent in the January-March quarter, disappointing expectations that growth would rebound at an even faster rate at the beginning of this year after a near-stall in activity in the final three months of last year.
The U.S. economy is being hurt this year by tax hikes and spending reductions designed to curb huge federal budget deficits.
The Federal Reserve at its meeting Wednesday stood by its aggressive efforts to stimulate the economy and reduce unemployment and held out the possibility that it is prepared to do more if growth doesn't rebound from the current soft patch which the central bank blamed in part on the government's tax increases and spending cuts to curb the deficit.
Many economists believe if the government's across the board spending cuts, known as a sequester, are not lifted, growth in the current April-June quarter and the rest of this year will come at a lackluster 2 percent or less.
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July 12th, 2025
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