Friday February 16 2018
US Consumer Sentiment Remains Strong
University of Michigan | Joana Taborda | joana.taborda@tradingeconomics.com

The University of Michigan's consumer sentiment for the United States increased to 99.9 in February of 2018, above 95.7 in January and better than market expectations of 95.5. It is the second strongest reading since 2004, preliminary estimates showed. Both current economic conditions and future expectations improved despite lower and much more volatile stock prices.

The gauge of current conditions rose to 115.1 from 110.5 in the previous month and expectations subindex went up to 90.2 from 86.3. Inflation expectations remained steady at  2.7 percent next year, and 2.5 percent in five years even in a wake of stronger wage growth. 

Stock market gyrations were dominated by rising incomes, employment growth, and by net favorable perceptions of the tax reforms. Indeed, when asked to identify any recent economic news they had heard, negative references to stock prices were spontaneously cited by just 6% of all consumers. In contrast, favorable references to government policies were cited by 35% in February, unchanged from January, and the highest level recorded in more than a half century. In addition, the largest proportion of households reported an improved financial situation since 2000, and expected larger income gains during the year ahead. To be sure, higher interest rates during the year ahead were expected by the highest proportion of consumers since August 2005. 

Consumers also anticipated a slightly higher inflation rate, although the year-ahead inflation rate has remained relatively low and unchanged for the past three months. Purchase plans have been transformed from the attraction of deeply discounted prices and interest rates that outweighed economic uncertainty, to being based on a sense of greater income and job security as the fewest consumers in decades mentioned the favorable impact of low prices and interest rates. Overall, the data signal an expected gain of 2.9% in real personal consumption expenditures during 2018.




Friday February 16 2018
US Housing Starts Highest Since 2016
Census Bureau | Joana Taborda | joana.taborda@tradingeconomics.com

Housing starts in the US jumped 9.7 percent month-over-month to an annualized rate of 1,326 thousand in January of 2018, following a downwardly revised 6.9 percent fall in December and beating market expectations of a 3.4 percent rise. It is the highest rate since October of 2016.

Single-family starts, the largest segment of the market, went up 3.7 percent to 877 thousand and the volatile multi-family segment increased 19.7 percent to 431 thousand. Overall, housing starts went up in the South (9.3 percent to 655 thousand); the West (10.7 percent to 393 thousand) and the Northeast (45.5 percent to 128 thousand) but fell in the Midwest (-10.2 percent to 150 thousand). 

Building permits soared 7.4 percent to a seasonally adjusted annualized rate of 1,396 thousand, the highest since June of 2007 and above market expectations of 1,300 thousand. Multi-family home permits jumped 25.4 percent to 479 thousand while permits for construction of single-family homes fell 1.7 percent to 866 thousand. Permits rose in the South (21.9 percent to 706 thousand) and in the West (5.3 percent to 378 thousand) but shrank in the Midwest (-11.7 percent to 189 thousand) and the Northeast (-16.9 percent to 123 thousand). 

Year-on-year, starts went up 7.3 percent and permits gained 7.4 percent.




Thursday February 15 2018
US Industrial Output Falls Unexpectedly in January
Federal Reserve | Joana Ferreira | joana.ferreira@tradingeconomics.com

US industrial production fell unexpectedly by 0.1 percent month-over-month in January 2018, following a downwardly revised 0.4 percent increase in December and missing market expectations of a 0.2 percent gain.

Mining output continued to shrink in January (-1 percent vs -0.4 percent in December), while manufacturing production was unchanged for the second consecutive month. Durable manufacturing went up 0.2 percent, the same pace as in the previous month, as output rose for machinery (0.6 percent vs -0.1 percent), motor vehicles and parts (0.6 percent vs 1.1 percent) and computer and electronic products (1.3 percent vs 0.7 percent). By contrast, nondurable manufacturing was flat, following a decline of 0.3 percent in December. Chemicals production grew 0.4 percent (vs -0.7 percent in December), while food, beverage, and tobacco products output contracted 0.4 percent (vs 0.2 percent).

Meanwhile, utilities output rose 0.6 percent in January, easing from a 4.6 percent jump in the previous month, with electric production growing by 0.5 percent (vs 4.4 percent in December) and natural gas advancing by 1.2 percent (vs 6.5 percent). 

Compared to the same month of 2017, industrial production rose 3.7 percent in January, as output rose for utilities (10.8 percent), mining (8.8 percent) and manufacturing (1.8 percent).

Capacity utilization for the industrial sector fell 0.2 percentage point in January to 77.5 percent, a rate that is 2.3 percentage points below its long-run (1972–2017) average.




Thursday February 15 2018
US Initial Claims Rise to 230K as Expected
DOL | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The number of Americans filing for unemployment benefits increased by 7 thousand to 230 thousand in the week ended February 10th 2018 from an upwardly revised 223 thousand in the previous week, in line with market expectations. Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

The 4-week moving average was 228,500, an increase of 3,500 from the previous week's revised average. The previous week's average was revised up by 500 from 224,500 to 225,000. 

On a non-seasonally adjusted basis, the biggest rises in initial claims were seen in Utah (383), followed by Iowa (368); Michigan (359); Minnesota (330); Kansas (272) and Illinois (225). Claims in Puerto Rico fell by 1484 and in Virgin Islands went up by only 7.

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending February 3, unchanged from the previous week's unrevised rate.

Continuing claims during the week ending February 3 was 1,942,000, an increase of 15,000 from the previous week's revised level. The previous week's level was revised up 4,000 from 1,923,000 to 1,927,000.

The 4-week moving average was 1,941,250, a decrease of 5,750 from the previous week's revised average. The previous week's average was revised up by 1,000 from 1,946,000 to 1,947,000. 




Wednesday February 14 2018
US Retail Sales Post Biggest Drop in 11 Months
US Census Bureau | Joana Ferreira | joana.ferreira@tradingeconomics.com

US retail trade fell unexpectedly by 0.3 percent month-over-month in January 2018, after showing no growth in December and below market expectations of a 0.2 percent gain. It was the largest decline in retail trade since February last year.

5 of 13 major retail categories showed month-over-month decreases: motor vehicle & parts dealers (-1.3 percent vs -0.1 percent in December); gardening and building material stores (-2.4 percent vs 0.7 percent); furniture & home furniture stores (-0.4 percent vs -1.1 percent); health & personal care stores (-1.2 percent vs -0.8 percent); and sporting goods, hobby, book & music stores (-0.8 percent vs -3.4 percent).

Meanwhile, sales at service stations rose 1.6 percent last month, after a 0.3 percent gain in December. Additional upward pressure came from: electronics & appliance stores (0.5 percent vs -2 percent); clothing & clothing accessories stores (1.2 percent vs -1.2 percent); miscellaneous store retailers (1.6 percent vs -2.6 percent); and general merchandise stores (0.2 percent vs 0.3 percent).

Sales were unchanged at food & beverage stores (vs 0.4 percent in December), nonstore retailers (vs 0.5 percent) and food services & drinking places (vs 0.9 percent).

Excluding automobiles, gasoline, building materials and food services, retail sales were unchanged last month after a downwardly revised 0.2 percent drop in December.

Year-on, year, retail trade grew 3.6 percent.




Wednesday February 14 2018
US Inflation Rate Higher than Expected
BLS | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in the United States increased 2.1 percent year-on-year in January of 2018, the same as in December and above market expectations of 1.9 percent. A slowdown in gasoline and electricity prices was offset by higher cost of food and medical care services. The monthly inflation rate went up to 0.5 percent from 0.2 percent amid broad-based cost increases.

Year-on-year, prices rose faster for fuel oil (12.5 percent from 15.2 percent); transportation services (4 percent from 3.7 percent); medical care services (2 percent from 1.6 percent); and food (1.7 percent from 1.6 percent). In contrast, the cost of energy grew less (5.5 percent from 6.9 percent in December), namely gasoline (8.5 percent from 10.7 percent); electricity (2.4 percent from 2.6 percent); utility piped gas service (0.2 percent from 4.7 percent); and medical care commodities (1.8 percent from 2.3 percent). Also, cost continued to decline for apparel (-0.7 percent from -1.6 percent); new vehicles (-1.2 percent from -0.5 percent); and used cars and trucks (-0.6 percent from -1 percent). On the other hand, inflation was steady for shelter (3.2 percent).

Excluding food and energy, annual inflation was flat at 1.8 percent, higher than expectations of 1.7 percent.

On a monthly basis, consumer prices went up 0.5 percent, following a 0.2 percent increase in December and above forecasts of 0.3 percent. Increases were broad-based, with prices of gasoline, shelter, apparel, medical care, and food all contributing. The energy index rose 3 percent, with the increase in the gasoline index more than offsetting declines in other energy component indexes. The food index rose 0.2 percent with the indexes for food at home and food away from home both rising.

Excluding food and energy, prices went up 0.3 percent. Along with shelter, apparel, and medical care, the indexes for motor vehicle insurance, personal care, and used cars and trucks also rose in January. The indexes for airline fares and new vehicles were among those that declined over the month.    .




Monday February 12 2018
US Government Budget Surplus Narrows in January
Mario | mario@tradingeconomics.com

The US budget surplus narrowed to USD 49.0 billion in January 2018 from USD 51.2 billion in the same month of the previous year, and compared to market expectations of USD 51.0 billion.

In January, outlays climbed 6.5 percent year-on-year (vs +0.7 percent in December) to USD 311.8 billion as other expenses accounted for USD 116 billion; social security for USD 82 billion; Medicare for USD 49 billion; defense for USD 40 billion; and interest on debt for USD 25 billion.

Meanwhile, receipts increased 4.9 percent (vs +2.1 percent) to USD 361.0 billion as individual income taxes accounted for USD 212 billion, jumping from 164 billion in the previous month; social security for USD 113 billion; other taxes and duties for USD 23 billion; and corporate income taxes for USD 13 billion.

Considering the first four months of the current fiscal year, the deficit went up to USD 176 billion from USD 159 billion a year earlier.




Thursday February 08 2018
US Jobless Claims Beat Forecasts
DOL | Joana Taborda | joana.taborda@tradingeconomics.com

The number of Americans filing for unemployment benefits dropped by 9 thousand to 221 thousand in the week ended February 3rd 2018, well below market expectations of 232 thousand. It is the lowest value in three weeks. Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

The 4-week moving average was 224,500, a decrease of 10,000 from the previous week's unrevised average of 234,500. This is the lowest level for this average since March 10, 1973 when it was 222,000.

On a non-seasonally adjusted basis, the biggest decreases in initial claims were seen in Missouri (-7,636); California (-4,767); NY (-3,742); Georgia (-1,983); Pennsylvania (-1,579) and Connecticut (-1,506). Claims in Puerto Rice fell by 159 and in Virgin Islands by 27.

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending January 27, unchanged from the previous week's unrevised rate.

Continuing claims during the week ending January 27 were at 1,923,000, a decrease of 33,000 from the previous week's revised level. The previous week's level was revised up 3,000 from 1,953,000 to 1,956,000. 

The 4-week moving average was 1,946,000, an increase of 12,500 from the previous week's revised average. The previous week's average was revised up by 750 from 1,932,750 to 1,933,500. 


Tuesday February 06 2018
US Trade Gap at 9-Year High
BEA | Joana Taborda | joana.taborda@tradingeconomics.com

The US recorded a USD 53.1 billion trade deficit in December of 2017, following a downwardly revised 50.4 billion gap in November and compared to market expectations of a USD 52 billion shortfall. It is the highest trade gap since October of 2008 as imports reached a new high mainly due to purchases of consumer goods, pharmaceuticals, cell phones and passenger cars. Exports also touched a fresh record high although rose at a slower pace than imports.

The December increase in the goods and services deficit reflected an increase in the goods deficit of $2.6 billion to $73.3 billion and a decrease in the services surplus of $0.1 billion to $20.2 billion.

Total exports of goods and services went up 1.8 percent to a new high of $203.35 billion. Exports of goods increased $3.4 billion to $137.5 billion, mainly due to industrial supplies and materials ($1.5 billion); organic chemicals  ($0.2 billion); fuel oil ($0.2 billion); capital goods ($1.2 billion); civilian aircraft ($0.8 billion); other industrial machines ($0.7 billion). Exports of services went up $0.1 billion to $65.9 billion: travel (for all purposes including education) increased $0.1 billion and maintenance and repair services rose $0.1 billion while transport decreased $0.1 billion.

Total imports jumped 2.5 percent to $256.5 billion. Imports of goods increased $6.0 billion to $210.8 billion, namely consumer goods ($3.2 billion); pharmaceutical preparations ($1.8 billion); cell phones and other household goods ($1.7 billion); automotive vehicles, parts, and engines ($1.1 billion); passenger cars increased ($1.1 billion); capital goods ($0.8 billion). Imports of services rose $0.3 billion to $45.7 billion: travel (for all purposes including education) increased $0.2 billion and charges for the use of intellectual property went up $0.1 billion.

On a non-seasonally adjusted basis, exports went up to OPEC (19.1 percent), Japan (11.4 percent), Brazil (8.8 percent), China (7.5 percent) and the EU (5.2 percent). On the other hand, sales went down to Mexico (-9 percent) and Canada (-7.4 percent). Imports jumped 6.1 percent from the EU and those from Japan 3.7 percent. In contrast, purchases fell from other major destinations, namely Brazil (-17.3 percent); Mexico (-9.3 percent); OPEC (-8.8 percent); China (-7.6 percent) and Canada (-2.6 perrcent). The trade deficit worsened with the EU ($-15.81 billion from $-14.73 billion) and Canada ($-2.2 billion from $-1.03 bilion) but narrowed with China ($-30.81 billion from $-35.43 billion); Mexico ($-5.37 billion from $-5.98 billion) and Japan ($ -5.53 billion from $-5.76 billion). Also, the trade balance with the OPEC switched into a $0.21 billion surplus from a $1.26 billion shortfall.

As a percentage of the GDP, the goods and services deficit was 2.9 percent in 2017, up from 2.7 percent in 2016.

Considering full 2017, the US trade deficit widened 12.1 percent to $566.0 billion, the highest since 2008. Exports rose 5.5 percent to $2.33 trillion, while imports climbed 6.7 percent to a record $2.9 trillion. Both showed the biggest gains since 2011. The trade gap with China increased 8.1 percent to a record of $375.2 billion and the gap with Mexico rose to $71.1 billion, the second highest on record. The petroleum gap of $95.9 billion was the smallest since 2003, as petroleum exports rose to a record high.





Monday February 05 2018
US Services Sector Growth Highest Since 2005: ISM
ISM | Joana Taborda | joana.taborda@tradingeconomics.com

The ISM Non-Manufacturing PMI index for the United States jumped to 59.9 in January of 2018 from an upwardly revised 56 in December, beating market forecasts of 56.5. The reading pointed to the strongest expansion in the services sector since August of 2005 amid rising production, new orders and employment which was the strongest on record.

Faster increases were seen for business activity/production (59.8 from 57.8); new orders (62.7 from 54.5, the highest since January of 2011); employment (61.6 from 56.3, the highest on record); backlogs (50.5 from 50); and new export orders (58 from 56.5). On the other hand, inventories declined (49 from 53.5) and prices went up (61.9 from 59.9).

The 15 non-manufacturing industries reporting growth in January — listed in order — are: Management of Companies & Support Services; Arts, Entertainment & Recreation; Mining; Utilities; Retail Trade; Construction; Transportation & Warehousing; Public Administration; Real Estate, Rental & Leasing; Health Care & Social Assistance; Agriculture, Forestry, Fishing & Hunting; Educational Services; Finance & Insurance; Wholesale Trade; and Accommodation & Food Services. The three industries reporting contraction in January are: Information; Other Services; and Professional, Scientific & Technical Services.