Instant View: Jobless claims fall to 4-month low

NEW YORK (Reuters) - New U.S. claims for unemployment benefits dropped to a four-month low last week, government data showed on Thursday, a rare dose of good news for an economy that has been battered by a credit rating downgrade and falling share prices.

The U.S. trade gap widened in June to its largest since October 2008, as both U.S. imports and exports declined in a sign of slowing global demand, a government report showed on Thursday.

COMMENTS:

RYAN SWEET, SENIOR ECONOMIST, MOODY'S ANALYTICS, WEST CHESTER,

PENNSYLVANIA INTERNATIONAL TRADE: "Overall this is more than anticipated by the BEA in its earlier GDP estimates. We are going to see second-quarter GDP revised below 1 percent. This would signal the economy stalled in the first half.

"This would justify the risky but needed action the Fed took this week. Although the third-quarter GDP is improving, the economy is still underperforming its potential. Unfortunately we are going to be stuck with a 9 percent jobless rate for at least the next few months if for the rest of the year."

JOBLESS CLAIMS: "It's encouraging that claims are encouraging. It shows the market is healing, but claims are not consistent with a booming job market. There are reasons for optimism in claims. Businesses are clamping down on hiring. It will boil down to whether businesses will stick their necks out to start hiring those additional workers. It all has to do with lack of confidence."

JAY MUELLER, ECONOMIST AND PORTFOLIO MANAGER, STRONG CAPITAL

MANAGEMENT INC, MENOMONEE FALLS, WISCONSIN

"I don't think it's really a big deal one way or the other. We got a little bit of a scare when things bounced up above 400, but we're still just kind of hanging around this area. At this late into a recovery, it's worrisome at that level. We haven't quite broken through that 400,000 level."

"We're so far along at in this process that any downsizing would've been done long ago. The outflow rate from employment is just one part of the puzzle. The other part is the hiring. We should be seeing the situation improving more dramatically than it is. We're still way behind... We'd like to see further declines down to 375,000, and then 350,000."

PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK

"We've had several weeks now of low and gradually declining layoffs. The trouble is we've headed into a new storm of financial instability, the nature of which is to make companies try to reduce risk. We're looking toward a period of financial instability of uncertain length and that probably will inspire a lot of caution and nowadays, caution translates into layoffs. We'll see what happens next week, but the outlook for the August U.S. employment report is still for a result as good as it was in July, maybe better."

SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK

"Initial claims continue to soften, which is pretty positive. We were expecting a rebound above 400,000 but we got below there. This could suggest that labor markets aren't rapidly deteriorating, even if it still doesn't shed much light on what's happening on the hiring side of the equation."

MICHAEL CLOHERTY, HEAD OF U.S. RATES STRATEGY, RBC CAPITAL MARKETS, NEW YORK

"No special factors, so we didn't see any of the noise from the widely discussed FAA shutdowns.

"We still had this disconnect between the level of claims and growth of payrolls. No major change there so I don't think this is going to significantly change anyone's expectations for the economic outlook here, particularly given all of the extreme market moves.

"The attention is on equities and Europe, not claims."

VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS

"The shift downwards is not what the market was expecting given the FAA furlough that had been in effect for two weeks before ending one day before the cutoff of this reference week. Not only Fed workers, but construction workers as well connected with the airport renovation projects were forced to go forgo pay, and so it was thought that they would have had to file without knowing when Congress would appropriate funds to put them back to work. The report comes across as straight forward (one state provided an estimate), thus the FAA does not appear to have had a significant effect for either this reading, or the week prior (not one state reported increases of more than 1k for the week ending 7/30). Today's figure is nice, but could show to be revised away."