The Top 5 Economic Reports of the Week

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:

#1: Manufacturing Continues Steady Climb

The Commerce Department announced that factory orders rose 1.1% in June, which was much stronger than economists’ forecast for a 0.6% increase. Factory orders now stand at $503.2 billion, which is an all-time record. May’s orders were revised down to a 0.6% decline. Orders for non-defense capital goods (excluding aircraft) increased 3.3%. This was a strong report and shows that manufacturing is expanding, which will help support economic growth going forward. It is also a good sign for business activity heading into the final months of the year.

#2: Trade Gap Narrows on Shrinking Oil Deficit

In June, the U.S. trade deficit narrowed more than expected, falling 7% to $41.5 billion. That marks a three-and-a-half-year low and the lowest reading since January. Economists were expecting the deficit to widen slightly to $44.7 billion. Specifically, exports rose 0.1% to $195.9 billion, while imports declined 1.2% to $237.4 billion. May’s trade deficit was revised up to $44.7 billion from $44.4 billion. As the trade deficit continues to improve, due largely to a shrinking petroleum deficit, the U.S. economy should also continue its resurgence. Ironically, the U.S. trade deficit was a drag on second-quarter GDP growth, but as the trade deficit continues to shrink, we should see GDP growth steadily improve.

#3: Layoff Activity Plunges to 8-Year Low

For the week ending August 2, initial claims for unemployment dropped by 14,000 to 289,000. Economists were looking for an increase to 304,000. The four-week average slipped to 293,500. We are seeing fewer layoffs and more companies holding onto their employees, as the U.S. economy continues to improve. Initial claims for unemployment are now at their lowest level since February 2006.

#4: Consumer Debt Rises on Big Ticket Items

In June, there was a $17.3 billion increase in consumer credit. Non-revolving loans, which includes cars and college tuition, jumped $16.3 billion. Economists were looking for an $18.7 billion increase after May’s $19.6 billion advance. An improving labor market is boosting consumer confidence, which is why we’re seeing demand pick up for bigger ticket items like cars and an increase in credit card debt. A more confident consumer bodes well for the U.S. economy.

#5: Wholesale Inventories Continue Slow and Steady Pace

In June, wholesale inventories climbed 0.3%, which is the same as May’s revised inventory gain. Economists were looking for a 0.7% gain. Sales grew just 0.2%, down from May’s 0.7%. The inventory-to-sales ratio is now 1.17 months. While businesses are continuing to stock their shelves, their pace has slowed slightly. Inventory levels are nearly in line with sales, so wholesalers will need to continue restocking to keep up with demand.

Have a nice weekend,

Louis Navellier

Louis Navellier

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