The economic recovery is likely to draw strength from exports such as farm products, autos, aircraft and industrial machinery _ all of which helped lower the nation's trade deficit in October.

Exports of U.S. goods rose for a sixth straight month. Further gains in exports should bolster manufacturers, who struggled during the recession. Heavy equipment maker Caterpillar Inc., for instance, has predicted that its sales will rise next year, reflecting in part greater demand from China and other Asian markets.

Economists noted that much of the improvement in the trade gap reflected a fall in oil imports. But David Resler, chief economist at Nomura Securities, said U.S. exporters are benefiting from growing economies overseas and a weaker dollar. A weak dollar makes their goods cheaper in other countries.

Resler boosted his forecast for growth in the current quarter to 3.2 percent, from 2.9 percent. The U.S. economy grew at a 2.8 percent pace in the July-September period after a record four straight quarterly declines.

The trade deficit fell to $32.9 billion in October, 7.6 percent below a revised September deficit of $35.7 billion, the Commerce Department said Thursday. The improvement reflected a 2.5 percent jump in exports. Imports rose a smaller 0.4 percent, a gain that was held back by a big drop in oil imports.

Through the first 10 months of this year, the deficit is running at an annual rate of $364.8 billion. That's about half the gap for all of 2008. The narrower trade deficit reflects the impact of the recession, which cut consumer demand for domestic and foreign goods.

The stock market rose after the improved trade deficit was reported. In afternoon trading, the Dow Jones industrial average was up about 75 points, or 0.7 percent. Broader stock averages also rose.

Meanwhile, the number of newly laid-off workers seeking jobless benefits rose more than expected last week, after falling for five straight weeks. Claims were partly inflated by a surge after the Thanksgiving holiday week, when many state unemployment offices are closed, a department analyst said. Seasonal layoffs in the construction industry also played a role.

"The key point ... is that the underlying trend in claims is falling rapidly," Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a note to clients.

Initial claims for unemployment insurance rose by 17,000 to a seasonally adjusted 474,000, the Labor Department said Thursday. That was above analysts' expectations of 460,000 new claims. Economists closely monitor initial claims, which reflect the pace of layoffs and companies' willingness to hire.