U.S. trade gap contracts sharply in hopeful sign for economy; jobless claims fall
(Photo Credit: Ian Waldie/Bloomberg)
The U.S. trade deficit narrowed significantly in July and applications for unemployment benefits fell more than forecast, according to government reports that lifted hopes about the economic recovery.
Stocks jumped and the dollar regained some ground against the Japanese yen following the announcement of the news.
The large trade gap has been one of the most vexing problems facing the U.S. economy. In the second quarter of this year, a sharp and unexpected surge in imports and slowdown in exports cut nearly 3.4 percentage points off of U.S. economic growth.
Trade figures released by the Commerce Department Thursday morning showed that some of that was made up in July when the deficit fell 14 percent to $42.8 billion, much more than economists had forecast. It was the biggest drop in 17 months.
Exports were up 1.8 percent for a total value of $153.3 billion, the highest in two years thanks to strong sales of U.S. jets, industrial machinery and computer equipment and other manufactured items. Imports, which had been growing, fell 2.1 percent to $196.1 billion.
But despite the improvement in July, the cumulative deficit for the first seven months of 2010 remained high compared to last year: $288.83 billion versus $203.96 billion.
The Obama Administration has said that as part of its plan to return the U.S. economy to strong growth it hoped to double exports in five years.
The politically-charged trade deficit with China fell about 1 percent in July as exports jumped.
The Labor Department said Thursday that new filings for jobless claims fell a seasonally adjusted 27,000 in the week ending Sept. 4 to 451,000. That was the lowest in two months but still higher than it would be in a healthy economy, but it means that companies may be holding off from further layoffs. About 4.5 million people continued to draw unemployment aid in the week ending Aug. 28, about 2,000 less than the previous week.
Ariana Eunjung Cha
September 9, 2010; 9:19 AM ET
Categories: Trade , Unemployment
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