Dow recovers despite weak US jobs data

Julian Harris
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RISING numbers of fresh benefit claims and lower than expected wholesale inventories combined to produce another gloomy day for the American economic outlook.

Yet stocks in New York pared recent losses, as a narrowed US trade deficit was seen as one positive point in a recent string of weak economic data.

Imports from Japan tumbled more than 25 per cent after its earthquake, contributing to a narrowing of the trade gap to $43.7bn (£26.7bn), down 6.7 per cent from a revised estimate of $46.8bn in March -- suggesting stronger second-quarter GDP figures than economists had expected.

The Dow Jones industrial average climbed over a percentage point to touch 12,181, while the Nasdaq composite index rose 0.46 per cent to print 2,690 during the day’s trading.

The markets shrugged off the early bad news, including a 1,000 increase in new claims for unemployment benefit. Fresh claims were up to 427,000 in the latest recorded week, despite economists’ forecasts of a drop in the numbers.

First-time claims have now been perched above the 400,000 mark for nine weeks in a row. Analysts normally associate a level below that with steady job growth.

“On the one hand this is a disappointing confirmation that the number of people continues to run above 400,000,” said Nomura Securities’ David Ressler. “But on the more encouraging front it looks like this may be a reflection of job turnover as opposed to sustained joblessness.”

Inventories rose 0.8 per cent to $447.2bn in the first month of the second quarter, below economists’ forecasts for a one per cent rise. Automotive inventories, one of the biggest categories, fell 1.3 per cent.

Sales rose to $393.5bn, the highest since June 2008. But the 0.3 per cent month-to-month rise was much less than the 1.2 per cent gain analysts had forecast.