The outlook for the U.S. economy brightened a little Thursday after new datapointed to improvement in hiring and greater exports.
The number of Americans applying for unemployment benefits last week fell by6,000 to a seasonally adjusted 361,000, the Labor Department said. Economistsnoted that the level suggests the modest job creation in July could carry overinto August.
The U.S. trade deficit narrowed to $42.9 billion in June from $48 billion inMay, the Commerce Department said in a separate report. That's the lowest levelin 18 months.
The drop was largely because of cheaper oil imports. But exports also rose to arecord-high $185 billion, an encouraging sign at a time when global growth hasslowed. U.S. companies even sold more goods in Europe, despite the region'songoing financial crisis.
Some economists revised their growth forecasts higher for the April-June quarterafter seeing the better trade data. A smaller trade deficit acts as less of adrag on growth because it means the United States is spending less onforeign-made products and is taking in more from sales of U.S.-made goods.
"As long as we can keep selling more of our goods across the world, theeconomy can (grow) at a moderate pace," said Joel Naroff of NaroffEconomic Advisors. "In June, despite all the craziness in Europe and theslowdowns in Asia, our exports managed to increase. "
The economy is looking more resilient after faltering in the spring.
Employers added 163,000 jobs in July, the biggest increase since February. FromApril through June, employers had created a lackluster 73,000 jobs a month, notenough to keep up with a rising population.
Applications for unemployment benefits measure the pace of layoffs. When theyfall consistently below 375,000, it typically suggests hiring is strong enoughto lower the unemployment rate.
Claims had averaged 385,000 a week in June before the numbers were muddied lastmonth by seasonal factors related to temporary summertime layoffs in the autoindustry. The seasonal distortions had faded by last week, providing a clearerpicture of a slightly improved job market.
"The clear decline since June provides some corroboration of thebetter-than-expected payrolls reading," said Jim O'Sullivan, chief U.S.economist at High Frequency Economics. "In short, encouraging data for therecovery."
Paul Dales, an economist at Capital Economics, said fewer unemployment applicationssuggest that the job market is fairly stable. "The pickup in jobs growthin July may therefore be sustained in August," Dales said.
Still, a third report offered a reminder that the economy remains weak. U.S.wholesalers cut their inventories in June from May after seeing sales fall bythe most in three years, the Commerce Department said. If the trend continues,that could slow factory output and offset some of the benefits from higherexports.
And economists are worried that slower overseas growth will eventually reducedemand for U.S. exports. About one-fifth of U.S. exports go to Europe, which isin the third year of a financial crisis.
"It is surely only a matter of time before a deep recession in theeuro-zone starts to take a greater toll on US exports," said Dales.
So far, that hasn't happened. Exports to the 27-nation European Union grew 1.7percent in June.
The sharp drop in the trade deficit could mean the economy actually grew at afaster pace in the April-June quarter than first estimated. The government saidlast month that the economy expanded at a 1.5 percent annual rate in theApril-June quarter.
Peter Newland, an economist at Barclays Capital, says he expects second-quartergrowth to be revised to an annual pace of 1.8 percent.
The government will release its second of three estimates for the grossdomestic product on Aug. 29.
