Plus: Delphi Emerges from Bankruptcy, Unemployment Claims Fall, Service Sector Grows and CO₂ Emissions May See Steepest Drop in 40 Years.

U.S. Trade Gap Narrows in August
The United States trade gap narrowed for the first time in four months in August, as the deficit shrank from $31.9 billion in July to $30.7 billion in August, according to the U.S. Commerce Department on Friday.

The unexpected narrowing was the result of plunging oil imports and a fourth consecutive month of rising exports. Exports in August were at their highest level since December.

“In August, the goods deficit decreased $0.8 billion from July to $41.9 billion, and the services surplus increased $0.3 billion to $11.2 billion,” the government report states. “Exports of goods were virtually unchanged at $86.8 billion, and imports of goods decreased $0.8 billion to $128.7 billion. Exports of services increased $0.2 billion to $41.4 billion, and imports of services decreased $0.1 billion to $30.2 billion.”

“Trade has for the past year helped cushion the contraction of the US economy, which plunged into recession in December 2007,” Agence France-Press notes. The level of trade between the U.S. and the rest of the world has been picking up since spring, as oil prices have rebounded from their winter lows and demand for consumer products and large industrial goods slowly returns.

“The Commerce Department’s report on trade provided another hint that global markets were waking up after a sharp downturn, and that export growth could add to the country’s total economic output in the final months of the year,” the New York Times says.

The government report comes amid other optimistic signs, both for trade and for global growth.

The Organization for Economic Cooperation and Development (OECD) on Friday said that an increase in its index of leading indicators suggests major economies are beginning to recover. In Asia, China, Korea and Taiwan are reporting renewed growth in exports. Although Germany, the No. 2 exporter after China, posted an August drop in exports last week, new foreign orders and other indicators point to an upward trend, according to the OECD.

The Times reports that, “as Asia and the U.S. emerge from the global economic crisis, Europe appears likely to be the world’s laggard.”

Delphi Emerges More Agile from Bankruptcy
Last Tuesday, the auto supplier Delphi, a former subsidiary of General Motors Co., exited bankruptcy after four years of court-supervised corporate restructuring through a sale of its assets to lenders and its former parent company GM, Agence France-Presse reports.

The new Delphi will retain only four of the 44 plants it operated in the U.S. when it originally filed for Chapter 11 in October 2005. Delphi’s international holdings, which were not included in the bankruptcy filing and employ roughly 100,000 workers in 32 countries, will be folded into the restructured firm, AFP notes.

According to the New York Times, the company’s lenders agreed to forgive approximately $3.4 billion in debt, while investing $900 million into the new organization. GM is estimated to have spent $12.5 billion in helping the company restructure, and the difficulty in reorganizing Delphi is considered one of the causes for GM’s own bankruptcy in June.

The new Delphi will be smaller and more focused on remaining competitive in a challenging market. “Delphi has become more agile, nimble and resilient,” Delphi CEO Rodney O’Neal said in a statement.

New Jobless Claims Drop to Lowest Level Since January
The number of new initial claims for unemployment in the U.S. has fallen to its lowest level in nearly a year, raising hopes for improving conditions in a still unstable job market.

According to new data from the Department of Labor, the seasonally adjusted figure for initial claims dropped to 521,000 in the week ending October 3, a decrease of 33,000 from the previous week and the lowest four-week moving average since January 17.

These figures exceeded some earlier estimates, indicating that new job losses are slowing down at an increased pace. A survey of economists by Dow Jones Newswires predicted a decrease of 11,000, the Wall Street Journal reports (subscription required).

This was the fourth drop in five weeks and the second-lowest weekly total of new initial claims this year, though the figures remain well above the 325,000 claims that experts believe signal a healthy job market, according to the New York Times. The number of people continuing to claim benefits also fell by 72,000, reaching 6.04 million, although Congress has already added an extra 53 weeks of unemployment benefits on top of the 26 weeks normally offered by states.

Service Sector Grows for First Time in a Year
According to the latest monthly non-manufacturing Report on Business from the Institute for Supply Management (ISM), the U.S. service sector grew in September for the first time in a year, signaling a major boost to the overall economy.

ISM’s Non-Manufacturing Index rose to 50.9 percent in September, up 2.5 points from 48.4 percent in August and following 11 consecutive months of contraction. Index readings above 50 indicate industry growth.

Expansion in the service sector is a welcome sign because services represent a significant portion of the nation’s business activity and employment, and because the manufacturing sector has already returned to growth.

“It is unsurprising that the manufacturing sector began growing before the service industry. While automakers might increase production because dealers’ lots are empty, there is no similar dynamic for, say, an auto repair shop,” the Washington Post notes.

Global CO Emissions May See Steepest Drop in 40 Years
Carbon dioxide emissions could fall by as much as 3 percent worldwide in 2009 due to the global economic crisis, the International Energy Agency (IEA) said last week.

This would be the steepest drop in CO₂ emissions than any time in the last four decades, the IEA reported in a new study. This would lead to emissions in 2020 being 5 percent lower — even in the absence of additional policies — than the IEA estimated just 12 months ago.

At a press conference in Bangkok last week, chief IEA economist Fatih Birol confirmed that China surpassed the U.S. as the world’s top carbon polluter in 2007, adding that “it will be the same in the future.” (Source: Agence France-Presse)

The new study, a special early excerpt of the World Energy Outlook (WEO) 2009, outlined how steeply countries would have to cut their carbon emissions over the next 20 years to fix the concentration of CO₂ in the atmosphere at a level that would ensure a two-degree threshold in temperature increase is not crossed. The IEA will launch the entire WEO 2009 on Nov. 10, 2009.