September 8, 2017
It's Friday and that means it's time to review the latest economic data and identify which pockets of the economy are heating up and which are slowing down. Don't worry about catching every headline and every report throughout the week—I recap all of the most important news impacting your wealth right here every Friday. Let's take a look at this week's big headlines…
Factory Goods Orders
The Commerce Department reported on Tuesday that factory goods orders fell 3.3% in July, slightly worse than the 3.2% fall that economists predicted and unfortunately marking the largest drop since August 2014. July's results are a little bit of a slap in the face from June, where orders pushed higher by 3.2%.
The main culprit behind July's disappointing numbers is a drop in transportation equipment orders, which slid 19% since June. However, on a bright note, orders for nondurable goods, such as fuel, alcohol, and cosmetics, increased 0.4% to $237.4 billion.
Balance of Trade Report
On Wednesday, the Commerce Department announced that the U.S. trade deficit rose 0.3% in July. Peeling back the layers, exports shrank 0.3% to $194.4 billion (down from $194.9 billion in June), and imports shrank 0.2% to $238.1 (down from $238.5 in June). While stronger export and import numbers would have of course been welcome news to all of us, there are several moving pieces to consider.
The $43.7 billion trade deficit increased slightly less than economists' expectations of $44.6 billion and could actually signal more economic growth for the third quarter. On the other hand, given the still-unfolding fallout from the devastation of Hurricane Harvey, we shouldn't be too surprised if the trade gap ticks up further in next month's release. Notably, the country's trade gap with China reached an 11-month high.
Friday's wholesale inventories report from the Commerce Department was mixed. Inventories rose 0.6% in July, higher than initial estimates and matching the rise seen in June. Meanwhile, July sales trickled down 0.1%, leaving a slight imbalance and signaling that more time than average would be needed for wholesalers to clear their shelves. At this current pace, wholesalers have a 1.30 month supply — up just an inch from the 1.29 month ratio in June. Industry observers believe that demand for vehicles and other goods have a pretty decent chance of ramping up as businesses in storm-ravaged states start to replace automobiles and restock other important products.
In closing, I want everyone, particularly those in Florida and the surrounding states, to prepare and stay safe and sound as Hurricane Irma prepares to potentially touch ground in the region. That's all I have for you this week. I'll be in touch again next week with the latest ratings updates out of Portfolio Grader.
Have a great weekend,