(Reuters) — The number of Americans filing new claims for jobless benefits fell sharply last week to its lowest level since the early days of the 2007-09 recession, suggesting the job market is still healing despite weakness in the broader economy.
Other data on Thursday showed a narrowing of the U.S. trade gap in March, although drops in imports and exports during the month gave potential 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 the U.S. Labor Department said.
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.
The data on claims has no direct bearing on the Labor Department's monthly employment report for April due on May 3. However, it suggests that while employers have cut back on hiring, they are feeling less pressure to lay workers off.
"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, Pennsylvania.
Analysts had expected 345,000 new jobless claims last week, and U.S. stock index futures added to gains following the release of the claims data, while yields on U.S. government debt rose.
The four-week moving average for new claims, a less volatile measure of labour market trends, fell 16,000 last week to 342,250.
Economists expect the jobs report on May 3 will show employers hired 145,000 people last month. Employers added only 88,000 workers to their payrolls in March after a solid 268,000 increase in February.
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.
Ongoing weakness in the labour market led the U.S. Federal Reserve to keep a monetary stimulus programs at full throttle on May 1 following a two-day policy review. Policymakers said in a statement they could even step up bond purchases to help the economy more if needed.
The level of claims last week was the lowest since January 2008, a month after the beginning of a deep recession. A Labor Department analyst said there was nothing unusual in the data and no states had estimated their claims.
Claims during the spring are difficult to adjust for seasonal swings, although a second Labor Department analyst said most spring holiday breaks have passed.
Separately, Commerce Department data showed the U.S. trade deficit fell more than expected in March as imports recorded their biggest drop since 2009.
That suggests economic growth in the first quarter may have been stronger than the 2.5 percent annual rate initially estimated by the government. The trade gap narrowed 11 per cent to $38.8 billion — the second smallest since January 2010.
The smaller trade gap in February reflected a 2.8 per cent fall in imports of goods and services to $223.1 billion. The decline in imports of goods was almost broad based, adding to signs of sluggish domestic demand already flagged by weak retail sales and manufacturing data.
In another worrisome sign, exports of goods and services slipped 0.9 per cent to $184.3 billion. Exports have been one of the bright spots in the economy, but are being crimped by a slowing global economy as Europe's sovereign debt crisis fuels what increasingly looks like a depression in several countries on the continent.
A recent strengthening of the U.S. dollar, even though the Federal Reserve has firmly remained on its ultra-easy monetary path, is also taking the edge off export growth. The dollar gained about 1.5 per cent on a trade-weighted basis so far this year.
In a third report, the Labor Department said U.S. non-farm productivity rose modestly in the first quarter as growth in output accelerated sharply and employers throttled back gains in the hours that their staffs worked.
Productivity increased at a 0.7 per cent annual rate. Economists polled by Reuters had expected productivity to gain at a 1.2 per cent rate.