US jobless claims decline while trade gap narrows

THE US Labor Department said yesterday that initial claims for state unemployment benefits fell for the second straight week, dropping 10,000 to a seasonally adjusted 390,000.

That is still well above levels seen before the 2007-2009 recession, but below a 400,000 claims level which economists say could likely prompt some acceleration in hiring.

In a separate report, the Commerce Department said the US trade deficit shrank four per cent to $43.1bn (£27bn) in September.

The gap was the narrowest since December thanks to record-high exports. The government could raise its estimate for third quarter growth to a 2.8 per cent annual rate from 2.5 per cent, said Paul Dales of Capital Economics.

Prices for US government debt extended losses on the claims and trade data, although traders were more focused on Europe’s unfurling debt crisis.