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 ISM Services Index
The Institute of Supply Management (ISM) reported that its services index surged to 57.2 in November, up from 54.8 in October. Since any reading over 50 signals an expansion, the current ISM service sector reading of 57.2 is very robust and actually represents the strongest service sector expansion in the past 12 months. Only the energy and healthcare sectors reported any significant contraction, while construction and retail sectors were the strongest in November. Fully 14 of the 18 service industries expanded in November, so fourth-quarter GDP growth looks very robust.
Balance of Trade Report
The Commerce Department reported on Tuesday that the trade deficit surged 17.8% in October, as imports rose 1.3% to $229 billion and exports declined 1.8% to $186.4 billion. As a result, the trade deficit increased to a four-month high of $42.6 billion in October, up from a revised $36.2 billion in September. A strong U.S. dollar may be starting to curtail U.S. exports, so the trade deficit in the upcoming months could become a significant drag on GDP growth.
Factory Goods Orders
The Commerce Department also reported that factory goods orders surged 2.7% in October. This was the largest monthly gain since January 2015 and the fourth straight monthly increase in factory orders. Much of the surge in factory orders was due to commercial aircraft orders. Excluding commercial aircraft and defense, factory orders still rose a respectable 0.2%. Also encouraging was that shipments of factory goods rose 0.4% in October. Overall, it appears that more robust global growth may continue to help boost factory orders for the foreseeable future, despite the fact that a strong U.S. dollar may eventually hinder factory orders several months from now.
In October, U.S. consumers borrowed at their slowest pace since June. Total credit increased at a 5.1% annual rate, or by $16 billion, which missed economists’ forecast for an $18.7 billion increase. September’s figure was revised to a $21.8 billion gain, up from a previously reported $19.3 billion rise. Revolving debt grew by $2.9 billion, and non-revolving debt increased by 6%.
That’s all I have for you this week; I’ll be back online on Monday with your weekly ratings changes.
Have a great weekend,