U.S. Trade Deficit Shrinks; Weekly Jobless Claims Rise

Bikram Pandey
08 Sep, 2011
New York City

U.S. weekly jobless claims rose 2,000 to 414,000 and trade deficit declined 13% in July. Exports increased at a faster pace than imports in the month as the dollar remained low and the crude oil prices remained above $100 a barrel for the fourth month in a row.

[R]11:50 AM New York – U.S. weekly jobless claims rose 2,000 to 414,000 and trade deficit declined 13% in July. Exports increased at a faster pace than imports in the month as the dollar remained low and the crude oil prices remained above $100 a barrel for the fourth month in a row.[/R]

U.S. stocks opened higher and struggled to gain traction after nearly two hours of trading. Banks were under pressure but industrials advanced ahead of the President Barack Obama’s jobs plan to the lawmakers.

Weekly jobless claims at the end of last week rose and trade deficit declined 13% in July. The health of the jobs market has not been the focus of investors and the U.S. lawmakers for the last six months.

Unemployment rate has been between 8% and 9% in the last one year and consumer spending has been below expectations.

However, the market was focused on the rate decisions in Europe and UK and bond market yields in the euro zone declined.

U.S. Weekly Jobless Claims Rise

Initial claims of weekly unemployment increased 2,000 in the last week to 414,000 according to the data released today by the Labor Department.

The average of the four-week claims increased to 414,750 last week from 411,000 at the end of the previous week.

Total number of people receiving jobless claims declined 30,000 to 3.72 million in the week ended August 27. The number of Americans receiving extended jobless benefits declined 78,500 to 3.6 million in the week ended August 20.

Twenty one states and territories reported an increase in claims and 32 states reported a decrease.

U.S. Trade Gap Shrinks

Exports in July increased 3.6% to $178 billion and imports fell 0.2% to $222.8 billion and trade deficit in the month declined 13.1% to $44.8 billion. The deficit in June was revised lower to $51.6 billion.

The crude oil, which forms the bulk of the U.S. imports, declined a fraction after the oil prices were above $100 a barrel for the fourth month in a row. The average price of the imported crude was $104.27 a barrel in the month.

Goods deficit decreased more than 10% to $60.6 billion and service surplus increased 0.4 billion to $15.8 billion.

Exports increased 15.1% from a year ago month and imports increased 13.6% in the period.

Europe, UK Rates on Hold

European Central Bank left its key lending rate on hold at 1.5% and the Bank of England left its benchmark rate at 0.5% and held its asset purchase program at 200 billion pounds.

The ECB left rates on hold after latest economic data suggested weakening economic growth and faltering employment growth. The central bank lifted rates in from a record low of 1% in April and again in July by 25 basis points.

The ECB President said at a conference that inflation is expected to fall below 2% in 2012 and lowered the bank’s assessment of the economic growth in the region and economy faces “high uncertainty and intensified downside risks.”

Asian Central Banks Hold Rates

Central banks in Asia also left rates on hold amidst global economic uncertainties and falling exports to the U.S. and Europe.

The central banks in South Korea, Philippines, Malaysia and Indonesia left rates on hold today. Korea left its rate at 3.25% for the third month in a row but the central bank noted the weakening exports from the region.

O.E.C.D. Lowers Growth Outlook

The Organization for Economic Cooperation and Development noted weakening economic backdrop in 34 member nations in its later report released today.

The Paris based economic group lowered expectations of economic growth in the second half for Germany, France, Italy and the U.S.

The group estimated third quarter economic growth to decline to 1.4% for France, Germany and Italy and negative 0.4% in the last quarter of the year.

The O.E.C.D. estimated 1.1% economic growth in the U.S. in the third quarter and 0.4% in the final quarter of the year.

The report also noted that economic growth may be affected if the euro zone debt stress intensifies and banks struggle raise more capital in the second half.

Italy Tackles Budget Deficits

Italian Prime Minister Silvio Berlusconi won the vote of confidence in the Senate after the market close. The austerity measures of 54 billion euros passed by the Senate will need a final approval from the lower house next week.

Swiss Unemployment Stable

Swiss unemployment rate was unchanged at 2.8% in August from the previous month according to the data released by the State Secretariat for Economic Affairs today.

Russia’s Growth Declines

Russia’s second quarter economic growth declined to 3.4% from 4.1% in the first quarter growth according to the data released by the Federal Statistics Office today.

Construction sector growth slowed down to 0.1% and government services expanded at 8.6% and manufacturing increased 6.9% in the quarter.

U.S. Stock Movers

Casey’s General Stores, Inc. ((CASY)) decreased 5.9% or $2.75 to $43.11 after the retailer reported first quarter total revenue increased to $1.87 billion from $1.36 million last year. Same store sales of grocery and other merchandise increased 6.2%.

Net earnings for the quarter rose to $39.4 million or $1.03 per diluted share compared to $37.3 million or $0.73 per share a year ago.

G-III Apparel Group, Ltd. ((GIII)) slumped 16.1% or $4.64 to $24.02 after the apparel and accessories retailer reported second quarter net sales increased 21.7% to $230 million from $189 million last year. Net income for the quarter fell to $1.6 million or 8 cents per diluted share compared to $3.0 million or 15 cents per share last year.

John Wiley & Sons, Inc. ((JW.A)) decreased 1.8% or 88 cents to $47.13 after the printing and publishing company reported first quarter revenues increased 5% to $430 million from $408 million in the same quarter last year. Net income in the quarter rose to $50.8 million or 82 cents per diluted share compared to $44 million or 72 cents per share a year ago.

Pall Corporation ((PLL)) slipped 7.9% or $3.86 to $44.96 after the filtration, separation and purification technology provider reported fourth quarter sales climbed 15% to $780.4 million from $678.6 million last year. Net income for the quarter rose $97.4 million or 82 cents per diluted share compared to $55.0 million or 46 cents per share a year ago earlier.