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…
Balance of Trade Report
On Friday, the Commerce Department announced that the U.S. trade deficit rose 1.7% in September. Looking at the details, exports, led by oil and chemicals, rose by 1.1% to $196.8 billion (up from $194.7 billion in August). Also, the re-opening of hurricane-affected ports has buoyed American shipments to international customers. Imports moved 1.2% higher to $240.3 (up from $237.5 in August), largely driven by industrial supplies, capital equipment and consumer goods.
While the U.S. trade deficit widened a bit, as you may recall, deficits can serve as a positive sign of U.S. consumers’ purchasing power, showing a heightened ability to buy imported goods in comparison to overseas consumers.
On Tuesday, The Conference Board announced that the Consumer Confidence Index rose 4.4% in October to 125.9, up from 120.6 in September and hitting its highest level in almost 17 years. Consumers’ assessment of present conditions improved in October, with 34.5% of consumers reporting current business conditions as “good,” up marginally from 33.4% in September. The number of those expecting business conditions to improve over the next six months also rose to 22.2%, up from the previous 20.9%.
It is worth noting that The Conference Board’s results are in line with the University of Michigan’s Index of Consumer Sentiment, whose October index saw its strongest reading in 13 years, at 100.7. The strong improvement bodes well for the future of household spending and indicates that Americans are feeling quite upbeat about the current economic picture.
Factory Goods Orders
The Commerce Department announced on Friday that factory goods orders increased 1.4% in September, with business investment seeing its largest gain in 14 months. This tops economists’ estimate of a 1.3% increase, and follows the 1.2% increase seen in August. A 30.8% surge in demand for commercial aircraft helped to lead factory goods orders higher. Economists believe that this momentum in manufacturing is poised to continue for several months to come, which will serve as a boon to the overall economy.
Unemployment Rate Report
With the first Friday of each month comes the payroll report from the prior month. The Labor Department reported this morning that the unemployment rate fell to 4.1% in October, down from 4.2% in September and a slight beat on economists’ expectations of a steady 4.2% rate. This also represents a new 16-year low. The largest gains came from food services and drinking places, offsetting the September decline that was largely reflective of the effects from Hurricanes Irma and Harvey.
The number of new payroll jobs created in October totaled 261,000, which fell below Wall Street’s expectations of 310,000. Average hourly earnings were $26.53 last month, falling by a penny from September’s hourly wage of $26.54. The labor force participation rate trickled lower, to 62.7% in October, down from 63.1% in the month prior. Overall, it was a relatively mixed report, but achieving a new record low makes it an encouraging one as well.
I should add that earlier in the week, payroll processor ADP released their data for October. ADP reported an addition of 235,000 jobs, a 74% increase from the 135,000 new jobs they announced in their September report.
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,