U.S. jobless claims reach 7-year high

U.S. initial jobless claims have hit their highest since the aftermath of the Sept. 11, 2001 terrorist attacks, according to figures released Thursday.

The U.S. Department of Labour said the number of Americans who asked for unemployment benefits spiked at 516,000 for the week ended Nov. 4.  That level represented a jump of seven per cent, or 32,000, compared with a week earlier.

The jobless claims figures also was the highest since the last week of September 2001.  Worse still, economists had expected the number to remain roughly stable at 484,000.

The jobless claims figures indicate a U.S. economy with its prospects heading south, experts said.

 "This report provides little reason for optimism about any easing in the pace of jobs declines from the 240,000 drop in October and the risk of an even more pronounced drop," said RBC Economics assistant chief economist Paul Ferley in a commentary Thursday.

As a four-week average, 491,000 Americans asked for employment benefits in the most recent reading, up 13,000 from the 477,000 one week earlier.

Examining these figures as a monthly average reduces the economic effect of a single event, such as a hurricane, on employment.

Another measure of the weakening U.S. jobs situation — the number of workers who receive employment benefits on a continued basis — stayed at a five-year peak. 

For the past three weeks, U.S. continuing jobless claims averaged 3.7 million, the highest figures since June 2003.

Trade figures shrink

U.S. trade figures, which showed a shrinking current account deficit, was actually bad news for the American economy.

How much Americans purchased from foreigners exceeded what they sold to other countries by $56 billion US in September, a drop of $3 billion compared to August's figures.

Usually a reduced trade deficit indicates growing international strength.

In September, however, both the amount Americans bought from foreign companies and how much they sold to non-American consumers dropped. 

September's trade deficit narrowed because shell-shocked consumers bought $12.5 billion less from other countries, while U.S. businesses sold $10 billion less in goods and services to foreigners in the same month.

In this case, these trade figures indicate an economy where domestic demand is disappearing, economists said.