WRAPUP 1-US jobless claims at two-mth low, trade gap shrinks

* Jobless claims fall 27,000 last week to two-month low

* Trade deficit narrows to $42.8 billion in July

* Imports retreat, exports highest since August 2008

(Refiles to add graphics link)

WASHINGTON, Sept 9 (BestGrowthStock) – New U.S. claims for
unemployment benefits fell more than expected last week to a
two-month low, while the trade deficit narrowed sharply in
July, hopeful signs for the stuttering economic recovery.

Analysts said the reports on Thursday helped to calm fears
growth was slowing sharply and implied the economy could soon
pull out of a recent soft patch.

“We were expecting that things would slow down in the third
quarter and start to pick up in the fourth quarter, but now it
seems like the slowdown in the third quarter wasn’t as severe
as we feared,” said David Sloan, an economist at 4CAST in New
York.

Initial claims for state unemployment benefits dropped
27,000 to a seasonally adjusted 451,000, the lowest since the
week ended July 10, the Labor Department said. That was well
below financial market expectations for 470,000.

Separately, the trade deficit shrank 14 percent to $42.8
billion in July, smaller than the $47.3 billion gap that
markets had expected.

U.S. stock index futures extended gains after the data,
while Treasury debt prices deepened losses and the U.S. dollar
pared losses versus the yen. The reports further reduced the
odds of the economy slipping back into recession.

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Graphic showing U.S. trade balance:

http://link.reuters.com/had52p

Graphic on jobless claims:

http://link.reuters.com/hud52p

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US JOBLESS CLAIMS RETREAT FROM NINE MONTH HIGH

A Labor Department official said given Monday’s Labor Day
holiday, some states had been unable to submit claims data,
resulting in the department making estimates for them.

Some have since submitted their data and the official said
the figures were close to the department’s estimates,
indicating the claims data was unlikely to be revised much.

Claims have pushed further away from a nine-month high of
504,000 touched in mid-August.

Labor market weakness is undermining the economy’s
recovery from its longest and deepest downturn in 70 years, but
a few rays of light are starting to poke through the dark cloud
of unemployment.

Private employers added a better-than-expected 67,000 jobs
in August and the prior month’s numbers were revised to show
36,000 more jobs created than previously reported, government
data showed last week.

The ailing labor market, characterized by a 9.6 percent
unemployment rate, is fueling anxiety among Americans, forcing
President Barack Obama to scramble for ideas to create jobs
ahead of November’s mid-term congressional elections.

Opinion polls suggest the Democratic Party could take a
serious beating and lose control the U.S. House of
Representatives to Republicans and perhaps even the Senate.

After slicing nearly 3.4 percentage points off of U.S.
economic growth in the second quarter, the narrowing of the
trade gap is a relief and reflected an improvement in exports.

In July, exports rose 1.8 percent to $153.3 billion, led by
strong overseas demand for U.S. civilian aircraft, machinery,
computers and other capital goods.

Imports fell 2.1 percent to $196.1 billion, after a 3
percent rise in June that had caught many analysts by surprise
and lowered estimates of second-quarter U.S. growth. The drop
in July was the largest since February 2009.

But imports from both China and Germany — two countries
with persistent trade surpluses — were the highest since
October 2008.

The closely watched trade deficit with China fell almost 1
percent in July, but for the first seven months of the year it
was nearly 18 percent higher, at $145.4 billion, compared to
the same period in 2009.

(Reporting by Lucia Mutikani and Doug Palmer; Editing by
Andrea Ricci)

WRAPUP 1-US jobless claims at two-mth low, trade gap shrinks