Low Weekly Jobless Claims And Shrinking Trade Deficit Boost The US Economic Picture  

• The number of Americans filing new claims for unemployment benefits rose moderately last week, while layoffs declined in September, pointing to still-tight labour market conditions at the end of the third quarter. The economy's prospects during the last quarter were bolstered by other data on Thursday showing the trade deficit shrinking to its smallest in nearly three years in August, with exports of capital goods hitting a record high. The economy has so far weathered hefty interest rate increases from the Federal Reserve to cool demand. That resilience raises the risk of the U.S. central bank hiking rates again by year-end.
• Initial claims for state unemployment benefits increased by 2,000 to a seasonally adjusted 207,000 for the week ended Sept. 30, the Labour Department said. Economists polled by Reuters had forecast 210,000 claims for the latest week. For much of September, claims hovered in the lower end of their 194,000-265,000 band for this year.
• Claims could push higher this month as the United Auto Workers (UAW) strike, now in its third week, constrains supply chains and forces manufacturers to temporarily lay off more non-striking workers. Ford Motor, General Motors and Chrysler-parent Stellantis have furloughed and laid off hundreds of workers because of strike impacts.
• Though conditions remain tight, the labour market is gradually cooling. The government reported on Tuesday that there were 1.51 job openings for every unemployed person in August and unfilled positions increased by the most in two years.
• The Commerce Department reported a 9.9% contraction in the trade deficit to $58.3 billion, the lowest since September 2020, beating economists' expectations of $62.3 billion. Exports of goods and services increased by 1.6% to $256.0 billion, driven by a surge in goods exports, particularly capital goods. However, food and beverage exports hit a low point.
• Imports of goods and services fell by 0.7% to $314.3 billion, with a notable decline in consumer and capital goods imports, potentially indicating reduced domestic demand due to higher borrowing costs. Economists predict that trade will contribute significantly to third-quarter GDP growth after being neutral in the previous quarter, expecting a boost of at least one percentage point to GDP growth.
• Economists foresee continued short-term support for economic growth, anticipating that foreign consumers will buy more American goods and the recovering manufacturing industry will bolster growth.

(Source: Reuters)