New Jobless Benefits Filings Tumble    09/09 11:42

   The number of people signing up for unemployment benefits dropped to the 
lowest level in two months, an encouraging sign that companies aren't resorting 
to deeper layoffs even as the economy has lost momentum.

   WASHINGTON (AP) -- The number of people signing up for unemployment benefits 
dropped to the lowest level in two months, an encouraging sign that companies 
aren't resorting to deeper layoffs even as the economy has lost momentum.

   The Labor Department reported Thursday that new claims for unemployment aid 
plunged last week by a seasonally adjusted 27,000 to 451,000. Economists had 
predicted a much smaller decline of just 2,000.

   In a second hopeful sign, the government said the trade deficit narrowed 
significantly in July as exports climbed to the highest level in nearly two 
years. The narrower gap reflected big gains in exports of U.S.-made airplanes 
and other manufactured goods. Imports declined.

   Together, the two reports eased fears that the economy might slide back into 
recession.

   "At the moment, we can rule out a double-dip for the economy," said Chris 
Rupkey, chief economist at Bank of Tokyo-Mitsubishi. "The economy is not out of 
the woods with today's data, but things look better than they have in several 
week, and there is no danger of a new downturn in activity."

   On Wall Street, the news lifted stocks. The Dow Jones industrial average was 
up around 60 points in morning trading.

   Concerns about a possible new recession had arisen after a batch of downbeat 
reports in August. For example, new applications for jobless benefits shot past 
the half-million mark in mid-August, the highest level since November. Since 
that spike, though, they have drifted lower. New filings for benefits are now 
at their lowest level since July 10.

   Meanwhile, the four-week moving average of new claims, which smooths out 
weekly fluctuations, also fell last week, dropping by 9,250 to 477,750. So did 
the number of people continuing to draw unemployment aid.

   Even with latest decline, new filing for jobless benefits are still much 
higher than they would be if the economy were healthy. When the economy is 
growing strongly and companies are hiring, requests for unemployment benefits 
fall below 400,000.

   The July trade deficit fell 14 percent to $42.8 billion, the Commerce 
Department said. That was much lower than economists had forecast. The lower 
trade deficit should give a boost to overall economic growth.

   Still, near double-digit unemployment is a political headache for President 
Barack Obama and his Democrat party with the congressional midterm elections 
just months away.

   Obama, in an interview with ABC News, conceded that if the midterm election 
turns out to be mostly a referendum on the economy, "we're not going to do 
well."

   Last week, the government reported that the unemployment rate ticked up a 
notch to 9.6 percent in August from 9.5 percent in July, as the number of 
jobseekers swamped the number of job openings. Private employers in August 
added a net total of only 67,000 jobs in August. Job gains would need to be 
more than three times that to drive down the unemployment rate.

   The unemployment rate has exceeded 9 percent for 16 straight months and is 
likely to extend that streak into next year.

   Without more jobs, consumers are likely to spend cautiously, which would 
keep the economy mired in its slow-growth rut.

   The economy's growth has slowed sharply from earlier this year as the impact 
of the government's stimulus package fades. Companies are wary about stepping 
up hiring because they are worried about their sales and whether the economy 
will continue to lose momentum. But in recent weeks, companies have shied away 
from resorting to even deeper layoffs.

   Thursday's report showed the number of people continuing to draw 
unemployment aid dipped by 2,000 to 4.5 million, the lowest since late June.

   That, however, doesn't include millions of people who are receiving extended 
benefits under emergency programs enacted by Congress during the recession. 
More than 5 million people were on the extended benefit rolls during the week 
of Aug. 28, the latest data available.


(KA)