US jobless claims have hit the lowest level in three years and exports are up, data showed on Thursday, fresh signs the economy is ticking along despite the threat of suffocation from Europe’s debt crisis.
The Labor Department announced new claims for government unemployment benefits fell last week to levels not seen since May 2008.
That could spell a further drop in joblessness – which has been one of the key ailments blighting the recovery.
“This is unexpectedly great news,” said Ian Shepherdson, chief US economist at High Frequency Economics. If claims can remain at this level, payroll growth will strengthen markedly within a month or so.”
Coming on the back of a drop in unemployment from nine per cent to 8.6 per cent last month, Thursday’s figures were met with barely concealed glee by economists.
“The latest unemployment claims readings are among the most promising signs in the recovery to date,” said RDQ Economics analysts.
There was also positive news from the Commerce Department, which reported that the US trade deficit fell to its lowest level in almost two years, thanks in large part to growing exports.
The current account deficit, which measures trade in goods and services, as well as transfers, fell 11.6 per cent to $US110.3 billion.
“The narrowing was driven by a broad-based rise in goods exports,” said Troy Davis of Barclays Capital.
Overall the data pointed to a stronger recovery, according to Steven Ricchiuto with Mizuho.
“These data points fit nicely with the idea that the economy is bouncing along a 1.5 to 2.5 per cent growth trajectory and is probably in the upper half of this range.”
Other positive news came from readings on the pace of manufacturing in the Philadelphia and New York regions of the US northeast industrial corridor. Activity in Philadelphia was at the highest level since April and, in New York, the highest level since May.
But it was not all sunshine and optimism, and economists remained wary of the prospects for US industry.
US industrial production fell in November for the first time in six months, led by a large decline in motor vehicles and parts – a sector where the global supply chain was hit by floods in Thailand – according to Nomura.
“Gathering risks from major export markets could undermine the US manufacturing sector if domestic demand fails to compensate,” said Paul Edelstein of IHS Global Insight.
“A eurozone double-dip recession is almost certainly coming,” he said, adding that a recent downturn in Chinese manufacturing signalled a broader slowing of the economy there.
“The impact on US exporters, however, will depend on which Eurozone countries experience the sharpest contractions, as well as the response of Chinese monetary policy.”
