Initial jobless claims fell 24,000 to 435,000 during the week ended November 6. Initial jobless claims have dropped in three out of the last four weeks. The 4-week moving average at 446,500 is the lowest since September 13, 2008 (see chart 1). Each of these developments is noteworthy and encouraging. In addition, the date is haunting because this is the last weekly reading before the Lehman Brothers debacle in September 2008. However, the level of initial jobless claims is refusing to budge from around 450,000. It will be a major accomplishment if initial jobless claims pierce through this level in the weeks ahead. Continuing claims, which lag initial jobless claims by one week, declined 86,000 to 4.301 million, the fourth weekly drop in the past five weeks. This reading is the lowest since November 2008 and is partly reflecting the expiration of eligibility of unemployment benefits. Funding for extended unemployment benefits expire on November 30. The lame duck Congress faces this deadline and needs to renew the program.
Trade Gap Narrows, Exports Continue to Provide a Boost
The trade gap of the U.S. economy narrowed to .0 billion in September, after a .5 billion deficit in the prior month. Exports advanced in September, mostly due to exports of services, while imports of goods and services fell.
The level of exports is the highest since August 2008. The recent weakness of the dollar is a contributing factor to the narrowing of the trade gap. Exports are projected to show gains in the forthcoming months. The trade deficit narrowed vis-à-vis all major trading partners -China, Euro area, Mexico, Japan and Canada- during September.
In related news, import prices advanced in September (+0.9%), reflecting higher imported oil prices; import prices excluding fuels also rose 0.4%. These numbers reflect partly the impact of a depreciating dollar.
The main concern about higher imported prices is the possible pass through to consumer prices. Higher imported oil prices will be reflected in the overall Consumer Price Index. However, core consumer prices, which exclude food and energy, have maintained a different drum beat even as import prices rose in 2010 (see chart 5).
The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.
