WASHINGTON The U.S. economy may be stumbling, but it is still standing.
That was the message from two economic reports that pointed to a weak labor market but also a better performance on trade that should boost third-quarter gross domestic product.
Still, Federal Reserve Chairman Ben Bernanke, highlighting an elevated jobless rate and sluggish underlying growth, hinted the central bank may ease monetary policy further at its September meeting.
"The Federal Reserve will certainly do all that it can to help restore high rates of growth and employment in a context of price stability," Bernanke told the Economic Club of Minnesota.
The employment backdrop remains sobering. The number of Americans filing new claims for jobless benefits rose unexpectedly last week, according to Labor Department data released just hours before President Barack Obama unveils a plan on job creation in a major address to Congress.
But a considerably narrower trade deficit for July offered a ray of hope for economic growth in the third quarter following a sluggish first half of the year.
Applications for unemployment benefits rose to 414,000 in the week ending September 3 from an upwardly revised 412,000 the prior week, the Labor Department said on Thursday. Wall Street analysts had been looking for a dip to 405,000.
"Jobless claims numbers have been stabilizing in recent weeks. We're probably seeing an economy that's just growing slowly," said Gary Thayer, chief macro strategist at Wells Fargo Advisors in St. Louis.
U.S. stocks were down about 1 percent on the day, in part due to disappointment over a lack of specificity in Bernanke's discussion of possible easing tools. Treasury bonds and the U.S. dollar rallied as investors shunned risk.
A deteriorating global economic outlook prompted the European Central Bank to leave interest rates on hold, even as markets ratcheted up the pressure on the Fed to take action at its September 20-21 meeting.
Excluding one week in early August, jobless claims have held above 400,000 since early April. The Labor Department said there was no discernible effect from recent hurricanes and storms on the national figures this week.
The four-week moving average of claims, which smooths out volatility, rose to 414,750 from 411,000 the prior week.
Continuing claims eased to 3.72 million from 3.75 million in the week ended August 27, the latest available data. The number of total recipients on benefit rolls was 7.17 million in the August 20 week.
U.S. employment growth ground to a halt in August, with zero net job creation raising fears of a new recession and putting pressure on the Fed to ease monetary policy further.
But in a respite from the negative news, the trade gap shrank to $44.8 billion in July, Commerce Department data showed, down sharply from June's $53.1 billion deficit and much lower than forecasts around $51 billion.
The 13.1 percent decline was the biggest month-to-month percentage drop in the deficit since February 2009.
"The trade numbers are probably sufficiently better than expected to cause some upward revision in the GDP forecast," said Pierre Ellis, senior economist at Decision Economics in New York.
U.S. exports rose 3.6 percent to a record $178.0 billion, driven by record shipments to countries in South and Central America and higher demand from China and major oil producers. Records were also set for two large categories, goods and services, as well as for capital goods and autos.
Economists wondered whether such strength could be sustained given a recent weakening in many industrial and developing nations.
U.S. imports slipped 0.2 percent in July to $222.8 billion, as the average price for imported oil declined for a second consecutive month to $104.27 per barrel and the volume of crude oil imports also fell. Imports from China, however, rose 2.1 percent.