Recovery Fades in UK; UK Trade Deficit Hits Record; US Trade Deficit Shrinks; Jobless Claims Drop or Not?

. The median of 13 forecasts in a Bloomberg News survey was for a 7.5 billion-pound deficit. Exports fell 0.9 percent and imports rose 3.1 percent.

While the jump in imports may signal strength in domestic demand, weakening exports suggest the economy is failing to benefit from the weakness of the pound, which has fallen by a about a fifth on a trade-weighted basis since the start of 2007. US Trade Deficit Narrows

Economists in the US were surprised to find US Trade Deficit Narrows, Unemployment Claims Drop

The trade gap shrank 14 percent, the most since February 2009, to $42.8 billion, the Commerce Department said today in Washington. The deficit was less than the lowest forecast in a Bloomberg News survey of economists.

Overseas shipments increased 1.8 percent to $153.3 billion, the highest since August 2008, while purchases from abroad declined 2.1 percent. Economists projected a deficit of $47 billion, according to the median of 73 estimates in the Bloomberg survey. Forecasts ranged from $43 billion to $52 billion.

Trade subtracted 3.37 percentage points from growth in April through June, the most since record-keeping began in 1947. The Commerce Department on Aug. 27 lowered its estimate for second-quarter growth to a 1.6 percent annual rate from the previously projected 2.4 percent. A final estimate for the quarter will be released Sept. 30.

Increased exports vs. imports will be a positive factor in GDP, so perhaps we will not see a negative 3rd quarter GDP. Nonetheless I expect surprises to be to the downside.

Jobless Claims Drop or Not?

Weekly unemployment claims fell this week as did the 4-week moving average as noted in Weekly Claims Drop to 451,000, 4-Week Moving Average at 478,000; Where to From Here?

One thing I missed was 9 states including California did not track claims because of Labor Day. From the preceding Bloomberg article…

Nine states didn’t file claims data with the Labor Department in Washington because of the Labor Day holiday, a department official told reporters as the figures were released. California and Virginia estimated their claims, and the U.S. government estimated the other seven.

Because of the holiday and more importantly because nine states made estimates, I do not think anyone can trust this drop in claims at all. Look for big revisions next week.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
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