First time claims for unemployment dropped 6,000 last week and the US trade deficit narrowed last month due to a drop in oil prices.

The employment picture is still cloudy, however as the data suggests stability in the job market rather than the kind of growth necessary to make a dent in the rate of joblessness.

AP:

The number of Americans applying for unemployment benefits fell by 6,000 last week to a seasonally adjusted 361,000, a level consistent with modest gains in hiring.

The Labor Department said Thursday that the less volatile four-week average rose by 2,250 to 368,250 in the week that ended Aug. 4.

Weekly applications bounced around in July, skewed by the difficulty of accounting for temporary summertime layoffs in the auto industry. The seasonal distortions had faded by last week.

Applications measure the pace of layoffs. When they consistently fall below 375,000, it typically suggests hiring is strong enough to lower the unemployment rate.

Paul Dales, senior U.S. economist at Capital Economics, said fewer unemployment applications suggest that job market is fairly stable.

"The pick-up in jobs growth in July may therefore be sustained in August," Dales said.

Also, the narrowing of the trade deficit in July suggests the economy is still growing, although modestly.

Reuters:

"The good news is the narrowing of the trade deficit due to oil, which is indicating the economy has stabilized at a low level. Sluggish growth ahead, but no signs of recession," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

The trade data, which showed exports increased 0.9 percent to a record $185.0 billion, suggested an upward revision to second-quarter growth.

Overall imports of goods and services declined 1.5 percent to $227.9 billion.

Trade subtracted almost a third of a percentage point from gross domestic product in the second quarter. The economy grew at a 1.5 percent annual rate, slowing from the first quarter's 2.0 percent pace.

While exports showed strength in June, anecdotal evidence suggests a slowdown because of weak global demand. The Institute for Supply Management's export index declined in July for a third straight month.

There also are concerns the worst drought since 1956, which has ravaged half of the country, could hit agricultural exports.