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, starting with the market moving Unemployment Rate Report:
Unemployment Rate Falls to Seven-Year Low
The Labor Department announced that 223,000 jobs were added in April, which missed economists’ estimate for 224,000 jobs. Despite missing expectations, the unemployment rate dropped to 5.4% from 5.5% in March, the lowest rate since 2008. While there are still other factors that may hinder steady job growth, like the strong U.S. dollar and lower oils prices, this report shows that the job market is rebounding.
Layoff Activity Remains Near 15-Year Low
For the week ending March 2, initial claims for unemployment rose by 3,000 to a seasonally adjusted 265,000. Economists were looking for claims to rise to 285,000. The four-week moving average fell to a record 15-year low by 4,250 to 279,500. With claims now below the 300,000 mark, it shows that labor market is improving.
U.S. Factory Orders Rebound
The Commerce Department reported this that new orders for factory goods jumped 2.1% in March. Economists were looking for a 2.4% increase, so this was slightly below estimates. December factory goods orders were revised to 0.1% drop, which is slightly worse than the previously announced 0.2% rise. This was the first significant increase in eight months. Key components contributing to the rebound include non-defense capital goods excluding aircraft, strong auto sales, and job growth.
Trade Deficit Reaches Six Year High
The U.S. Trade deficit surged to $51.4 billion, in the month of March. This is a $15.5 billion jump from February (revised) and more than the Bureau of Economic Analysis expected. Exports increased to $187.8 billion and imports also rose to $239.2 billion. The strong U.S. dollar is one reason why the deficit has ballooned so much. A strong dollar makes American exports more expensive abroad, therefore increasing the difference between imports and exports.
Consumer Credit Surges More Than Expected
In the month of March consumer credit gained $20.5 billion, increasing to a seasonally adjusted 7.4% annual rate, according to the Federal Reserve. This is the fastest growth pace in nearly a year. Meanwhile, revolving credit increased at 5.92% annualized rate, the first rise since December. Credit-card debt jumped to a 5.9% rate after declining for two consecutive months. Economists expected consumer credit to increase $15.9 billion.
Inventories Edge Up Slightly in March
While wholesale inventories increased 0.1% in March, sales still fell for an eighth consecutive month. This is following a 0.2% increase in February. Sales at the wholesale level also fell 0.2%, following February’s 0.6% plunge. Economists expect that there will be a rebound in sales in the coming months, with warmer weather driving consumers to spend more, which according to reports account for 70% of economic activity. In the previous months, sales took a hit due to the harsh winter.
That’s all I have for you this week; I’ll be in touch on Monday with the latest ratings updates out of Portfolio Grader.
Have a great weekend,
P.S. Next week, May 12 -14, I’ll be attending The MoneyShow in Las Vegas…and I’d love to see you there! I always look forward to meeting with you and our fellow subscribers face to face, and admission to the show is free. Simply call 800/970-4355 (be sure to mention priority code # 038778), or visit: https://secure.moneyshow.com/msc/lvms/registration.asp?sid=LVMS15&newReg=t&scode=%20038778.