* Jobless claims fall sharply to 324,000 last week
* Trade deficit narrows in March but imports, exports fall
* U.S. job market improving despite economic soft patch
By Jason Lange
WASHINGTON, May 2 The number of Americans filing
new jobless benefits claims fell sharply last week to its lowest
level since the early days of the 2007-09 recession, a sign the
job market is still healing even though the economy remains
Other data on Thursday showed a narrowing of the U.S. trade
gap in March, although drops in imports and exports offered
warning signs over the strength of domestic and foreign demand.
Initial claims for state unemployment benefits dropped
18,000 to a seasonally adjusted 324,000 last week, the Labor
The claims report runs counter to a growing number of
signals that economic activity softened in March and April, a
phenomena economists have dubbed the spring swoon because it
also happened in the previous two years.
"Growth slowed between the first and second quarters, but
the claims data suggest that the extent of this slowing was
limited," said Daniel Silver, an economist at JPMorgan in New
The data on claims has no direct bearing on the Labor
Department's monthly employment report for April due on Friday.
However, it suggests employers are feeling less pressure to lay
workers off, even if they have cut back on hiring.
"Layoffs (are) not an issue. Companies are reluctant to
hire. This is keeping the jobs market in a rut," said Ryan
Sweet, an economist with Moody's Analytics in West Chester,
Analysts had expected 345,000 new jobless claims last week,
and the positive signal from the data sent U.S. stock prices
higher, while yields on U.S. government debt rose. An interest
rate cut from the European Central Bank also lifted investor
Economists expect Friday's jobs report will show employers
hired 145,000 people last month, an improvement from March's
dismal pace of 88,000 but not enough to bring down the
still-elevated jobless rate, which is seen steady at 7.6
Supporting the view that hiring picked up modestly, a survey
of small businesses showed they added workers in April for the
fifth straight month. Planned layoffs also fell.
The recent slowdown in the economy has been blamed on
government belt-tightening, although analysts also think a mild
winter followed by an unusually cold March may have led some
employers and consumers to bring forward hiring and purchases.
TRADE DEFICIT NARROWS
Ongoing weakness in the labor market and a slowing in
inflation led the U.S. Federal Reserve to keep its monetary
spigots open on Wednesday following a two-day policy review.
Policymakers said they could even step up bond purchases if the
economy needed more help.
The level of claims last week was the lowest since January
2008, a month after the start of the worst recession in decades.
Separately, Commerce Department data showed the U.S. trade
deficit shrank more than expected in March as exports fell and
imports recorded their biggest drop since 2009, which could mean
U.S. consumers are demanding fewer goods and services.
"It tells a sad tale of weakening growth momentum in both
the U.S. and globally," said Millan Mulraine, an economist at TD
Securities in New York.
Analysts at Capital Economics were more sanguine about the
drop in imports, which they said could be a temporary factor
related to the timing of a Chinese holiday that might have
depressed the flow of goods out of the Asian giant.
Regardless, the narrowing of the trade gap to $38.8 billion
suggests economic growth in the first quarter may have been a
bit stronger than the 2.5 percent annual rate estimated by the
government last week.