WASHINGTON – The outlook for U.S. economic growth is looking slightly better.
U.S. businesses sold a record number of goods and services in Europe, China and other foreign markets in February, while imports declined.
Many economists began raising their forecasts for January-March growth after seeing Thursdays government report on the lowest trade deficit since the fall.
And the jump in exports helped drive stocks higher for a second straight day. The economy still has a long way back to full health. More people applied for unemployment benefits last week, the government said in separate report. That followed last weeks report that hiring slowed sharply in March after three months of strong job growth.
The mixed economic picture, along with tame inflation cited in a third report, gives the Federal Reserve more ammunition to stick with its plan to hold interest rates near record lows when it meets later this month.
The underlying message is actually a good one, said Paul Dales, senior U.S. economist at Capital Economics, after the three reports were released. It suggests that growth is a bit stronger.
The U.S. trade deficit narrowed more than 12 percent in February to $46 billion. Thats down from $52.5 billion in January, the widest deficit in more than three years. Exports rose to a record $181.2 billion, while imports dropped to $227.2 billion.
A smaller trade deficit reduces the drag on growth. More exports help the economy grow because they typically boost factory production, which can fuel more hiring and lead to greater consumer spending.
And fewer imports subtract less from growth, largely because consumers are spending less on overseas goods and services.
The jobs picture dimmed a little last week after the government said hiring slowed in March to half the pace of the previous three months.
The Labor Department offered more disappointing news Thursday: The number of people seeking weekly unemployment benefits jumped last week by 13,000 to a seasonally adjusted 380,000 – a 10-week high.
The four-week average rose to 368,500. After steadily declining since last fall, applications have leveled off in recent weeks. The four-week average is essentially unchanged over the past two months.
A third report showed that modest growth hasnt really spurred inflation. U.S. wholesale prices were flat in March after a drop in energy prices offset rising costs for food and pickup trucks.
Mild inflation leaves the Fed with leeway to help stimulate the economy.