US trade gap and jobless claims increase

Disappointing US economic data has weighed on Wall Street today as both jobless claims and the trade deficit increased much more than expected.

The US trade deficit widened to $46.3bn (£28.6bn) in February as surging imports of oil, capital goods and cars overpowered record exports in a signal of strengthening demand, the Commerce Department said.

A second report showed a higher-than-expected 26,000 rise in new claims for jobless benefits, which took the total to 397,000, significantly over forecasts of 378,000.

The 15.1 per cent trade gap jump from $40.3bn in January was much bigger than analysts expected and reflected the largest month-to-month gain in imports since March 1993.

The data pushed US markets to a significantly lower open, traders said.

“US markets opened significantly lower on the back of the weaker tone in Europe and on the back of disappointing economic data,” said Michael Hewson, market analyst at CMC Markets.

“Nearly all Dow components are lower with oil companies Exxon and Chevron leading the way.”

While the strong import growth is a sign of improved domestic demand, it suggested US production in the first quarter could be a bit softer than economists had expected.

Imports totalled $214.1bn in January, as oil prices rose to their highest level since October 2008 and imports of capital goods and foods, feeds and beverages set records.

US auto imports were the highest since February 2008 in a sign of strengthening demand for big-ticket items.

The Labor Department data for claims for state unemployment benefits is unlikely to change perceptions of an acceleration in the pace of job creation.

The four-week moving average of unemployment claims – a better measure of underlying trends – rose 3,000 to 392,250 last week and claims held beneath the 400,000 threshold for a third straight week.