Last week we were hit by a tidal wave of U.S. economic reports from both private sources as well as governmental agencies. Now, I understand that not everyone enjoys staring at pages of economic data as much as I do, so in today’s blog post I cover just the highlights of these market moving reports. Let’s take a look.
The Jobs Market
In the latest week, new claims for unemployment declined 5,000 to 366,000 compared with the previous week. This largely matched analyst estimates, which called for claims to fall to 365,000. At the same time, the closely-watched four-week moving average also declined by 2,250 to 350,500. Overall, it appears that the job market continues to slowly, but steadily, improve. This, of course, is important for GDP growth and consumer confidence.
In December, U.S. consumers incurred $14.6 billion more in debt. The 6.3% seasonally adjusted increase just about matched expectations. Last month’s surge in credit was thanks to an $18.2 billion jump in non-revolving debt. Credit card debt fell by $3.6 billion, or 5.1%. This consumer credit trend has been a long time in the making. While consumers are keeping their credit card debt in check, student loan debt continues to soar.
The Commerce Department announced today that the trade deficit plunged 20.7% to $38.5 billion in December. Economists had expected the trade gap to narrow to just $42.5 billion. The unexpected contraction was caused by plunging crude oil imports, which have declined to the lowest level since 1997. While total imports declined 2.7% to $224.9 billion, exports rose 2.1% in to $186.4 billion. This was the best economic news of the week. Due to the dramatic improvement in exports, fourth-quarter GDP is now due to be revised by an estimated 0.7%. So while fourth-quarter GDP was previously expected to have contracted 0.1%, this will likely be revised to a 0.6% increase.
The Private Sector
In December, U.S. factory orders rebounded 1.8% compared with November. While this was below economists’ estimates of a 3% rise, this still represents a significant reversal from the 0.3% contraction we saw in November. The gain was driven by a surge in orders for military and civilian aircraft—total durable goods orders jumped 4.3%. Meanwhile, orders for non-durables fell 0.3% thanks to falling gas prices. With December’s data filed away, we know that total factory orders advanced 3% to $5.66 trillion in 2012. This represents a slowdown from the 11.8% gain we saw in 2011; this year orders were weighed down by defense spending cuts as well as slower business stockpiling.
Wholesale stockpiles fell 0.1% in December; this was below economists’ estimates of a 0.4% increase. This also represents a slowdown from November, when wholesale inventories had risen 0.4% in November. Meanwhile, wholesalers reported flat sales in December. This is big news because wholesale inventories have fallen only three times in the past four years. While it’s too soon to identify any new trends, it’s possible that inventories may produce a larger drag on fourth-quarter growth than expected.