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…
Unemployment Rate Report
It’s the first Friday of the month, so it’s time to discuss the payroll report from the prior month. This morning, the Labor Department reported that March’s unemployment rate was unchanged, at 4.1% for the sixth-consecutive month. So, unemployment remains at its lowest level since the year 2000.
Digging into the details, U.S. employers added 103,000 new payroll jobs in March, missing economists’ forecasts for an addition of roughly 185,000 new jobs. Last month, average hourly earnings for employees increased by eight cents. Also, the labor force participation rate was 62.9%, relatively unchanged from February.
I should add that earlier this week, ADP reported an addition of 241,000 jobs in March. Overall, while today’s jobs report missed forecasts and momentum seems to have cooled a bit, unemployment is still sitting at a remarkable 17-year low. In fact, March was the 90th-straight month of job growth, the longest run of growth on record.
Balance of Trade Report
On Thursday, the Commerce Department reported that the U.S. trade deficit continues to rise, having climbed to an almost nine-and-a-half year high. In February, the trade deficit jumped 1.6% to $57.6 billion, up from a revised $56.6 billion in January. This is the sixth-straight month that the trade deficit has increased.
Breaking it down, U.S. exports rose 2.3% from January to $137.2 billion in February, supported by shipments of industrial materials and supplies, as well as cars and automotive parts. Imports increased 1.6% to $214.2 billion, largely thanks to food, civilian aircraft, computers and crude oil. The deficit with China dropped 18.6% to $29.3 billion. However, it’s still up 20.2% so far this year. Meanwhile, the trade gap with Mexico grew 46.6% to $6.6 billion.
Generally, the stronger the U.S. economy, the faster the trade deficit tends to rise. So, robust Gross Domestic Product (GDP) growth seems to be the primary reason for our larger trade deficit.
Factory Goods Orders
Wednesday’s report from the Commerce Department revealed that factory goods orders rose 1.2% in February to $498.0 billion. This was driven largely by new orders for transportation equipment, which jumped 7% to $83.5 billion. While results fell shy of economists’ estimates for 1.7% growth, February’s result is a nice rebound from the 1.3% decline recorded back in January.
The measure for business spending plans—orders for non-defense capital goods excluding aircraft—climbed 1.4%, compared to a 1.8% rise in January. Additionally, shipments of core capital goods—which are used to calculate business equipment spending in the GDP report—also rose 1.4% in February.
All-in-all, despite both Wall Street’s and Main Street’s trade war concerns, this report signals improving health in America’s manufacturing sector. And considering that manufacturing accounts for roughly 12% of U.S. economic activity, this report is a good omen for the U.S. economy.
That’s all I have for you this week. I’ll be in touch again next week with the latest ratings out of Portfolio Grader.
Until next week,