by CHQ Staff
You didn’t see it on the front page of one of the establishment newspapers or in the lead segment on establishment TV, but Reuters reported the number of Americans filing applications for unemployment benefits unexpectedly fell last week, hitting their lowest level in seven months, indicating the labor market remains solid.
Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 203,000 for the week ended Nov. 30, the lowest level since mid-April, the Labor Department said yesterday.
The Labor Department said no states were estimated last week. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 2,000 to 217,750 last week.
The claims data has no bearing on November’s employment report, which is scheduled for release today. According to a Reuters survey of economists, nonfarm payrolls probably increased by 180,000 jobs in November, boosted by the return of about 46,000 striking General Motors (GM.N) workers. The 40-day strike had helped to hold job growth down to 128,000 in October.
Reuters noted, employment gains have slowed this year, averaging 167,000 per month compared with an average monthly gain of 223,000 in 2018, in part because of a 17-month trade war between the United States and China, ebbing demand and a shortage of workers.
But the pace of hiring has been more than the roughly 100,000 jobs needed per month to keep up with growth in the working-age population. The unemployment rate is forecast holding at 3.6% in November.
In other good economic news, Reuters reported the U.S. trade deficit dropped to its lowest level in nearly 1-1/2 years in October, suggesting trade could contribute to economic growth in the fourth quarter.
The Commerce Department said the trade deficit tumbled 7.6% to $47.2 billion, the smallest since May 2018, as both imports and exports of goods declined. It was the second straight monthly fall in the trade bill and the percent drop was the biggest since January reported Reuters.
Now, here are the two nuggets buried in the Reuters report. First, the goods trade deficit with China fell 1.1% to $31.3 billion, with imports unchanged and exports increasing 3.4%.
Meaning, what? China is increasing its imports of US goods even in the face of President Trump’s tariffs and hardline trade bargaining, while the tariffs stall US imports of Chinese goods.
The second nugget is this; the goods trade gap with the European Union jumped 20% to $16.4 billion, with imports surging to a record high.
That sounds bad, right? Nope, its good.
Americans buy European luxury goods, and luxury purchases signal consumer confidence, a good sign for the American economy which is largely based on consumer spending.
These reports countered other data released this week showing manufacturing activity contracting for a fourth straight month in November, a slowdown in growth in the services sector as well as a drop in construction spending in October. The latest data suggested the economy was growing at a moderate pace rather than stall speed concluded Reuters.