U.S. economic reports hold out hope for hiring gains
WASHINGTON, D.C. — Fewer Americans are losing their jobs. Employers are struggling to squeeze more work from their staffs. The U.S. is producing so much oil that imports are plunging, narrowing the trade deficit.
A string of data Thursday raised hopes for stronger hiring and U.S. growth in coming months. More jobs would spur spending and help energize the economy, which has yet to regain full health nearly four years after the Great Recession officially ended.
And an interest rate cut Thursday by the European Central Bank, if it helps bolster the European economy, could also contribute to U.S. growth.
The U.S. economic reports came one day before the government will report how many jobs employers added in April. Economists think the gain will exceed the 88,000 jobs added in March, the fewest in nine months.
The government said Thursday that the number of Americans applying for unemployment aid fell last week to a seasonally adjusted 324,000 – the fewest since January 2008. Unemployment applications reflect the pace of layoffs: A steady drop means companies are shedding fewer workers. Eventually, they’ll need to hire to meet customer demand or to replace workers who quit.
The four-week average of unemployment applications, which is less volatile than the weekly figure, sank to 342,250. That was near a five-year low.
The figures for unemployment applications “point to potential improvement moving into May,” said Ted Wieseman, executive director of Morgan Stanley Research.
The government also said Thursday that the productivity of U.S. workers barely grew from January through March after shrinking in the last three months of 2012. Productivity shows how much employees produce per hour of work. When it remains weak, employers can’t keep pulling more output from their staffs. As customer demand strengthens, they’ll need to hire.
Productivity grew at a seasonally adjusted annual rate of 0.7 percent in the January-March quarter. And that was after it shrank in the October-December quarter. For all of 2012, productivity rose a scant 0.7 percent, after an even punier 0.6 percent rise in 2011.
At the same time, the government said the U.S. trade deficit narrowed in March for a second month. The main reason: The daily flow of imported crude oil reached a 17-year low.
The trade gap shows how much the value of imports exceeds the value of exports. A smaller trade gap is good for economic growth because it means America is exporting more while spending less on foreign goods.
The gap shrank 11 percent from February to $38.8 billion. Exports fell 0.9 percent, led by fewer shipments of U.S. machinery, autos and farm products.
But thanks to reduced U.S. demand for imported oil, imports fell even more – 2.8 percent. Petroleum imports fell 4.4 percent. Crude oil imports averaged 7 million barrels a day, the fewest since March 1996.
The United States isn’t using less oil. Rather, surging U.S. production has reduced the need for imported oil. U.S. output averaged 7.2 million barrels a day for the four weeks that ended March 29, the Energy Department says. That’s the most since 1992.
U.S. refiners have been taking advantage of low U.S. prices for oil and natural gas to produce fuels at much lower costs than their foreign competitors can.
Despite some encouragement from Thursday’s figures, the economy isn’t growing fast enough to reduce high unemployment. The Federal Reserve reiterated Wednesday after a policy meeting that it plans to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent from its current 7.6 percent.
The Fed also said it will continue to buy $85 billion a month in bonds to keep long-term borrowing costs down and encourage borrowing and spending. And it signaled that it’s open to expanding the bond buying if the economy needs it.
Since last year, the U.S. recovery has been held back, in part, by weak manufacturing. Earlier this week, for example, an industry trade group said the growth of U.S. factory activity slowed in April to its weakest pace this year. Even so, some manufacturers, particularly auto companies, are strengthening.
Last month, U.S. auto sales reached their highest level for any April since 2007. Sales grew 8.5 percent to nearly 1.3 million vehicles.
And on Thursday, Ford Motor Co. said it will add 2,000 workers to a Missouri plant that makes the F-150 pickup. The reason: Surging demand for U.S. trucks.
Ford’s pickup sales are up 19 percent so far this year. One reason is that home builders and other construction workers have finally been replacing trucks they kept during the recession. And the F-Series is the best-selling vehicle in the United States.
The ECB’s move Thursday to cut its key interest rate to a record low 0.50 percent and unveil other measures to spur lending means companies and households in the euro alliance will find it cheaper to borrow. Those lower borrowing costs, in turn, could help the U.S. economy if they allow European consumers and businesses to buy more U.S. exports.
Some economists cautioned that the ECB’s actions might not help much because European banks remain reluctant to lend, especially to small companies.
On Friday, economists expect the U.S. government to report that employers added more than 100,000 jobs in April but fewer than last year’s pace of nearly 185,000 jobs a month. The unemployment rate is expected to remain unchanged at 7.6 percent.
Some economists this week lowered their predictions for job gains after some reports had suggested that slower U.S. growth could hold back hiring.
Some are concerned that higher Social Security taxes and deep government spending cuts that took effect this year may have started to hurt the economy.
The Fed expressed that concern Wednesday after its policy meeting.
“Fiscal policy,” the Fed cautioned, “is restraining economic growth.”
AP Energy Writer Jonathan Fahey in New York contributed to this report.