Barry As President: Last Week Claims For State Jobless Benefits Increased 1,000 to 427,000

WASHINGTON (Reuters) - Record exports in April tempered fears that the economic recovery was running off the rails, even though first-time claims for jobless benefits edged higher last week.

A Commerce Department report on Thursday showed the trade deficit narrowed unexpectedly in April, as exports rose to a new record and imports from Japan tumbled more than 25 percent after its earthquake, tsunami and nuclear disaster.

The trade gap totaled $43.7 billion despite a jump in oil prices to the highest since September 2008, down 6.7 percent from a revised estimate of $46.8 billion in March, suggesting stronger second-quarter economic growth than economists had expected.

"A lot of forecasters, ourselves included, had lowered expectations for the second quarter, and this will reverse some of that reduction in expectations," said David Resler, chief U.S. economist at Nomura Securities International in New York.

Oil prices slid in May from April peaks but are creeping higher again after the Organization of the Petroleum Exporting Countries on Wednesday failed to agree on production increases.

A second report from the Labor Department, however, showed the number of Americans filing new claims for unemployment aid unexpectedly edged higher last week, reinforcing a view that the job market recovery has stalled.



Initial claims for state jobless benefits increased 1,000 to 427,000. Economists had forecast claims to drop.

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.

"It's the same dismal trend continuing. It's not getting worse, but it's not getting better either," said Keith Hembre, chief economist at Nuveen Asset Management in Minneapolis.

The U.S. government said on Friday the U.S. unemployment rate ticked up to 9.1 percent in May while nonfarm employers added a paltry 54,000 workers to their payrolls. The report was the latest and most stark sign of economic weakness.

Hembre said the unemployment rate could rise to 9.2 percent in the June report. That would add to President Barack Obama's political woes heading into the 2012 race for the White House.

Federal Reserve Chairman Ben Bernanke on Tuesday acknowledged the economy had slowed but offered no hint the central bank was considering more stimulus to boost growth.

JAPAN SUPPLY DISRUPTIONS

The $3 billion drop in imports from Japan from March to April was the largest on record. U.S. auto and auto parts imports from Japan and other suppliers fell $2.8 billion, partly reflecting supply chain disruptions in the aftermath of the triple disaster.

Once those problems are worked through, many analysts expect the trade gap to widen again.

"Right now (the trade report) looks like it's going to be positive for Q2 GDP, but by the end of June the bounce back will be obvious I think," said Thomas Simons, money market economist for Jefferies & Co in New York.

A separate Commerce Department report showed U.S. wholesale inventories rose a less-than-expected 0.8 percent in April, as automotive stocks fell the most since December 2009.

After the reports, U.S. stocks edged higher after six days of losses while Treasury debt was mostly flat and the dollar was higher against the euro.

The trade gap narrowed despite the biggest month-to-month jump in prices for imported oil in nearly three years. The average price rose to $103.18 per barrel, the highest since September 2008.

However, the volume of crude oil imports fell, pushing the overall U.S. oil import bill lower in April. That, combined with the lower imports from Japan, helped trim total U.S. imports 0.4 percent to $219.2 billion, even as imports of foods, feeds and beverages set a record, the report showed.

U.S. crude futures extended gains in trading on Thursday, touching $101.74 per barrel.

U.S. exports, buoyed by a weakening of the U.S. dollar, rose 1.3 percent to a record $175.6 billion, led by record shipments of industrial supplies and materials and capital goods and smaller gains for food, feeds and beverages, consumer goods and autos and auto parts.

The closely watched U.S. trade deficit with China jumped nearly 20 percent in April to $21.6 billion. It continues at a pace to exceed last year's record of about $273 billion.(source)