* Initial jobless claims fall 30,000 in latest week
* Seasonal adjustments a factor in drop, but trend positive
* Trade gap widens in August as exports decline
(Adds California agency statement in paragraphs 8-9)
By Doug Palmer
WASHINGTON, Oct 11 (Reuters) - The number of Americansfiling new claims for jobless benefits slid last week to thelowest level in more than four and a half years, according togovernment data that may provide a boost to President BarackObama a month before voters go to the polls.
The Labor Department report on Thursday was the latest datato suggest improvement in the jobs market, though thesurprisingly large 30,000 drop in new claims may have reflecteddistortions due to seasonal adjustments that are likely to besmoothed out in coming weeks.
"The overall trend seems to be that the labor market isimproving," said Brian Kim, a currency strategist at RBSSecurities in Stamford, Connecticut.
A Labor Department analyst said seasonal factors hadpredicted a very large increase in claims last week, which hesaid would be typical for the first week of the quarter.Unadjusted claims did rise, but far less than expected,resulting in the sharp drop in the seasonally adjusted figure.
He noted that one state reported a decline in claims lastweek when a rise had been expected. No states had been estimatedfor the report, he said.
"We will likely see some payback in the claims data reportednext week. But through this potential volatility, it does looklike the trend in the claims is improving somewhat," said DanielSilver, an economist at JPMorgan.
Silver said that California, given its large population andpast "massive swings" in its claims data, was probably the statethat caused the sharp drop in the seasonally adjusted figure.
But Pam Harris, director of the California EmploymentDevelopment Department, said the state was not to blame.
Harris said California had reported all its unemploymentinsurance claims data on time. She said a published reportstating it had not was "incorrect and inaccurate."
A second Labor Department official said "a processing issue"resulted in the state, which he did not identify, reportingfewer claims than expected.
"We cannot dictate to a state how they process their claims... This is one of the years they happened to be behind everyoneelse," he said, adding the Columbus Day holiday this week mayhave been one factor.
"This individual state, whenever there are increases inclaim, usually range from 15,000 to almost 20,000," he added.
The jobs data was tempered by a second report on Thursdaythat hinted at weaker U.S. and global demand.
The U.S. trade deficit widened in August to $44.2 billion,as U.S. goods exports fell for the fifth consecutive month andimports declined fractionally.
Instant View - U.S. jobless claims fall: Graphic - U.S. jobless claims: Graphic - U.S. trade deficit: Graphic - U.S. import prices:
Initial claims for state unemployment benefits fell to aseasonally adjusted 339,000, the lowest number of new claimssince February 2008, about a year before Obama took office inthe midst of the global financial crisis.
Economists polled by Reuters had forecast claims edging upto 370,0000 last week.
Zach Pandl, strategist at Columbia Management inMinneapolis, said "you do have to be cautious about possibledistortions. But with that caveat, the jobless claims numbershave been modestly encouraging over the last few weeks."
The four-week moving average for new claims, a bettermeasure of labor market trends, fell 11,500 to 364,000, thelowest in six months.
U.S. stocks rose in response to the jobs data, whileTreasury debt prices slipped and the dollar waslower against a basket of currencies .
A government report on Friday showed employers added amodest 114,000 jobs to payrolls in September but theunemployment rate dropped sharply to 7.8 percent, also thelowest level since Obama took office.
Former General Electric Chief Executive Jack Welch andothers suggested last week the payrolls data was fixed to makeObama look better ahead of the election, a charge the LaborDepartment strongly denied.
Obama's opponent, Republican Mitt Romney, has accused thepresident of mishandling the economy.
Thursday's claims report showed the number of people stillreceiving benefits under regular state programs after an initialweek of aid fell to 3.27 million in the week ended Sept. 29, thelatest data available. It was the lowest since May.
A Reuters poll on Thursday showed economists were slightlyless optimistic about U.S. growth, lowering their median growthforecasts to an annualized 1.6 percent for the first quarter of2013, compared to 1.7 percent last month.
The group of more than 70 respondents also trimmed theirsecond-quarter forecasts to 2.1 percent from 2.3 percent,suggesting the U.S. economy will continue its slow, steady ploddespite a recession in Europe, a slowdown in China and morerestrictive fiscal policy at home.
The monthly trade deficit increased to $44.2 billion inAugust, from an upwardly revised estimate of $42.5 billion inJuly, the Commerce Department said. Analysts were expecting anAugust trade gap of about $44.0 billion.
Overall U.S. exports dropped 1.0 percent as troubles inEurope continue to weigh on global growth, while imports fell0.1 percent in a sign of faltering U.S. demand for consumerproducts, autos and capital goods.
"It looks like net exports will contribute negatively to GDP(gross domestic product) growth, subtracting as much as half apercentage point," said Michael Moran, chief economist at DaiwaSecurities America in New York.
A separate Labor Department report showed that overall U.S.import prices rose 1.1 percent for the second consecutive monthin September, while U.S. export prices rose 0.8 percent.
(Additional reporting by Gertrude Chavez-Dreyfus and EllenFreilich in New York; Editing by Andrea Ricci, James Dalgleishand Lisa Shumaker)
Keywords: USA ECONOMY/