By Pedro Nicolaci da Costa
WASHINGTON (Reuters) - The U.S. economy may be stumbling, but it is still standing.
That was the message from two economic reports that pointed to a weak labor market but also a better performance on trade that should boost third-quarter gross domestic product.
Still, Federal Reserve Chairman Ben Bernanke, highlighting an elevated jobless rate and sluggish underlying growth, hinted the central bank may ease monetary policy further at its September meeting.
"The Federal Reserve will certainly do all that it can to help restore high rates of growth and employment in a context of price stability," Bernanke told the Economic Club of Minnesota.
The employment backdrop remains sobering. The number of Americans filing new claims for jobless benefits rose unexpectedly last week, according to Labor Department data released just hours before President Barack Obama unveils a plan on job creation in a major address to Congress.
But a considerably narrower trade deficit for July offered a ray of hope for economic growth in the third quarter following a sluggish first half of the year.
Applications for unemployment benefits rose to 414,000 in the week ending September 3 from an upwardly revised 412,000 the prior week, the Labor Department said on Thursday. Wall Street analysts had been looking for a dip to 405,000.
"Jobless claims numbers have been stabilizing in recent weeks. We're probably seeing an economy that's just growing slowly," said Gary Thayer, chief macro strategist at Wells Fargo Advisors in St. Louis.
U.S. stocks were down about 1 percent on the day, in part due to disappointment over a lack of specificity in Bernanke's discussion of possible easing tools. Treasury bonds and the U.S. dollar rallied as investors shunned risk.
A deteriorating global economic outlook prompted the European Central Bank to leave interest rates on hold, even as markets ratcheted up the pressure on the Fed to take action at its September 20-21 meeting.
Excluding one week in early August, jobless claims have held above 400,000 since early April. The Labor Department said there was no discernible effect from recent hurricanes and storms on the national figures this week.
The four-week moving average of claims, which smooths out volatility, rose to 414,750 from 411,000 the prior week.
Continuing claims eased to 3.72 million from 3.75 million in the week ended August 27, the latest available data. The number of total recipients on benefit rolls was 7.17 million in the August 20 week.
U.S. employment growth ground to a halt in August, with zero net job creation raising fears of a new recession and putting pressure on the Fed to ease monetary policy further.
But in a respite from the negative news, the trade gap shrank to $44.8 billion in July, Commerce Department data showed, down sharply from June's $53.1 billion deficit and much lower than forecasts around $51 billion.
The 13.1 percent decline was the biggest month-to-month percentage drop in the deficit since February 2009.
"The trade numbers are probably sufficiently better than expected to cause some upward revision in the GDP forecast," said Pierre Ellis, senior economist at Decision Economics in New York.
U.S. exports rose 3.6 percent to a record $178.0 billion, driven by record shipments to countries in South and Central America and higher demand from China and major oil producers. Records were also set for two large categories, goods and services, as well as for capital goods and autos.
Economists wondered whether such strength could be sustained given a recent weakening in many industrial and developing nations.
U.S. imports slipped 0.2 percent in July to $222.8 billion, as the average price for imported oil declined for a second consecutive month to $104.27 per barrel and the volume of crude oil imports also fell. Imports from China, however, rose 2.1 percent.
(Additional reporting by Doug Palmer in Washington and Ellen Freilich in New York; Editing by Andrea Ricci)
Our 2024 Coverage Needs You
It's Another Trump-Biden Showdown — And We Need Your Help
The Future Of Democracy Is At Stake
Our 2024 Coverage Needs You
Your Loyalty Means The World To Us
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
The 2024 election is heating up, and women's rights, health care, voting rights, and the very future of democracy are all at stake. Donald Trump will face Joe Biden in the most consequential vote of our time. And HuffPost will be there, covering every twist and turn. America's future hangs in the balance. Would you consider contributing to support our journalism and keep it free for all during this critical season?
HuffPost believes news should be accessible to everyone, regardless of their ability to pay for it. We rely on readers like you to help fund our work. Any contribution you can make — even as little as $2 — goes directly toward supporting the impactful journalism that we will continue to produce this year. Thank you for being part of our story.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
It's official: Donald Trump will face Joe Biden this fall in the presidential election. As we face the most consequential presidential election of our time, HuffPost is committed to bringing you up-to-date, accurate news about the 2024 race. While other outlets have retreated behind paywalls, you can trust our news will stay free.
But we can't do it without your help. Reader funding is one of the key ways we support our newsroom. Would you consider making a donation to help fund our news during this critical time? Your contributions are vital to supporting a free press.
Contribute as little as $2 to keep our journalism free and accessible to all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. Would you consider becoming a regular HuffPost contributor?
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. If circumstances have changed since you last contributed, we hope you'll consider contributing to HuffPost once more.
Support HuffPostAlready contributed? Log in to hide these messages.