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:
The Commerce Department reported on Tuesday that consumer spending jumped 0.4% in June, topping economists’ estimates for a 0.3% rise. Adjusted for inflation, consumer spending rose 0.3%. Wages and salaries increased 0.3% in June. Despite the increase in consumer spending in June, inflation still remains tame, as the personal consumption expenditures (PCE) price index only rose 0.1% in June. In the past 12 months, core PCE is up 1.6%, which is still below the Fed’s 2% inflation target.
Initial Claims for Unemployment
For the week ending July 30, jobless claims increased by 3,000 to 269,000, which missed economists’ expectations for jobless claims to slip to 265,000. The four-week moving average also rose in the most-recent week, climbing to 260,250. Still, initial claims for unemployment have remained below the 300,000 threshold for 74-straight weeks, which is the longest stretch since 1973.
Factory Goods Orders
On Thursday, the Commerce Department released factory goods orders for June. Orders slipped 1.5% in June, and May’s orders were revised lower to show a 1.2% decline. Economists were expecting a 1.8% drop in June. Factory goods orders have now declined for two-straight months. Manufacturing continues to be hindered by the strong U.S. dollar and slowing global demand, while production has been hampered by large inventory gluts.
Unemployment Rate Report
According to the Labor Department, 255,000 jobs were added in July, and the May and June data was revised higher by 18,000 more jobs. Economists were expecting 179,000 jobs to be created last month. The unemployment rate remains unchanged at 4.9%. More importantly, average hourly earnings increased 0.3%, or $0.08, to $25.69 and are up 2.6% in the past 12 months. So the wage inflation that the Fed’s been predicting is finally unfolding.
The Commerce Department announced this morning that the trade deficit surged 8.7% in June to $44.5 billion, which was significantly higher than economists’ consensus estimate of $43.2 million. The trade deficit is now at the highest level in 10 months due largely to soaring exports. Imports rose 1.9% to $227.7 billion in June, while exports only rose by 0.3% to $183.2 billion. A higher trade deficit remains a drag on overall GDP growth, so some economists may revise their GDP estimates a bit lower.