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
The Commerce Department reported on Tuesday that the U.S. trade deficit surged 8.6% to $48.7 billion in October, a nine-month high. Peeling back the layers, imports jumped 1.6% to $244.6 billion, buoyed by mobile phones, apparel and household goods. The uptick in imports is largely a reflection of merchants preparing for the upcoming holiday shopping season.
Exports were flat at $195.6 billion, as increased shipments of petroleum products helped offset a fall in capital equipment and consumer goods. The report also signaled a widening trade gap with China and Mexico. The deficit with China increased 6.9% to $31.9 billion. Meanwhile, the trade gap with Mexico widened from $5.1 billion to $6 billion.
Consumer Credit Report
On Thursday, the Federal Reserve Board of Governors released October’s Consumer Credit Report. Headline consumer credit rose $20.5 billion to a seasonally adjusted $3.80 billion in October, surpassing the expected $17.2 billion increase. This is the largest pickup in consumer borrowing in 11 months. The pickup is mostly due to revolving credit–which represents mostly credit-card borrowing–rising at an annual rate of 9.9%, compared to September’s 7.3% rise.
Non-revolving credit, made up of loans for cars and education, rose at an annual rate of 5.3%, slightly lower than September’s annual rate of 5.7%. Overall, the report signals a healthy increase in spending. It is worth noting that Wall Street typically does not react to consumer credit data, especially considering its two-month lag.
Factory Goods Orders
On Monday, the Commerce Department announced that factory goods orders slipped 0.1% in October, after two consecutive monthly increases. A decrease in both civilian and military aircraft, which were upwardly revised to 1.7% in September, contributed to October’s dip. However, results still topped economists’ estimate of a 0.4% decrease.
Orders for core capital goods excluding aircraft—commonly used as a measure of business equipment spending in the GDP report—rose 0.3%, compared to the 0.5% dip in the prior report. Economists believe that overall, the earlier momentum seen in manufacturing remains present, indicating healthy manufacturing activity and higher corporate capital spending.
Unemployment Rate Report
As you know, the first Friday of each month brings with it the payroll report from the month prior. The Labor Department reported today that November’s unemployment rate remains at a 17-year low, unchanged from October’s 4.1%. The number of new payroll jobs created in November totaled 228,000, soaring above Wall Street’s expectations for an addition of about 200,000 new jobs. Average hourly earnings for all employees rose five cents to $26.55 last month. The labor force participation rate held steady for the second-straight month at 62.7%. This report is further indication of a robust economy.
Also, earlier this week the ADP Research Institute reported an addition of 190,000 jobs, down from an unrevised 235,000 jobs in October. The two metrics often differ by thousands of jobs, but for the most part typically show similar trends. We can see that in both cases, the job market continues to firm up.
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,