Wednesday November 21 2018
US Consumer Sentiment Revised Lower
University of Michigan | Joana Taborda | joana.taborda@tradingeconomics.com

The University of Michigan's consumer sentiment for the US fell further to 97.5 in November of 2018 from a preliminary reading of 98.3 and 98.6 in October. It is the lowest value in three months. Both current conditions and expectations were revised lower although the drops were more related to income than political party.

The gauge for consumer expectations declined to 88.1 from a preliminary of 88.7 and 89.3 in October and the current economic conditions subindex also fell to 112.3 from a first estimate of 113.2 and 113.1 in October. Inflation expectations for the year ahead eased to 2.8 percent from 2.9 percent, the same as in the previous estimate while the 5-year outlook rose to 2.6 percent from 2.4 percent, also matching earlier figures. 

Consumer sentiment has remained largely unchanged at very favorable levels during 2018, with the November reading nearly at the center of the eleven month range from 95.7 to 101.4. Although the data recorded a decline of 2.8 Index points following the election, the drop was related more to income than political party: among those with incomes in the bottom third, the Sentiment Index rose by 10.4 points and fell by 6.6 points among those in the top third of the income distribution. In contrast, the Sentiment Index remained unchanged among Democrats and Republicans prior to and following the election. 

Consumers' interest rate expectations have always traced the outlines of economic cycles. As expansions lengthen, the number of consumers who expect interest rate increases gradually increases. After some threshold is reached, however, consumers in large numbers abruptly anticipate future declines in interest rates. Sales declines are then accelerated not only by falling job and income prospects but also from the expectation of falling interest rates in the future. While there is no reason to anticipate a sudden change in interest rate expectations in the net few months, it is still an important task for the Fed to avoid hitting the threshold that causes widespread postponement of purchases.




Wednesday November 21 2018
US Durable Goods Orders Post Biggest Fall in Over a Year
US Census Bureau | Joana Ferreira | joana.ferreira@tradingeconomics.com

New orders for US manufactured durable goods slumped 4.4 percent from a month earlier in October 2018, following a downwardly revised 0.1 percent decline in September and worse than market expectations of a 2.5 percent drop. It was the largest fall in durable goods orders since July 2017.

Demand for transport equipment slumped 12.2 percent in October (vs 0.9 percent in September), led by nondefense aircraft and parts (-21.4 percent vs -19.3 percent) and defense aircraft and parts (-59.3 percent vs 117.1 percent) while orders for motor vehicles and parts rose (0.2 percent vs 0.9 percent). Demand also declined for primary metals (-2.3 percent vs -1.2 percent) and machinery (-0.5 percent vs 0.1 percent). Meanwhile, increases were recorded in orders for electrical equipment, appliances, and components (2.9 percent vs -0.8 percent), computers and electronic products (1.6 percent vs 0.5 percent), and fabricated metal products (1 percent vs -2.4 percent).

Excluding transportation, new orders edged up 0.1 percent (vs -0.6 percent in September). Excluding defense, new orders decreased 1.2 percent (vs -1.4 percent in September).

Shipments of manufactured durable goods in October, down following two consecutive monthly increases, decreased $1.4 billion or 0.6 percent to $254.5 billion. This followed a 1.0 percent September increase. Transportation equipment, also down following two consecutive monthly increases, drove the decrease, $1.6 billion or 1.8 percent to $87.6 billion.

Unfilled orders for manufactured durable goods in October, down following eight consecutive monthly increases, decreased $2.0 billion or 0.2 percent to $1,183.0 billion. This followed a 0.7 percent September increase. Transportation equipment, down following two consecutive monthly increases, drove the decrease, $2.9 billion or 0.4 percent to $815.1 billion.

Inventories of manufactured durable goods in October, down two of the last three months, decreased $0.1 billion or virtually unchanged to $410.9 billion. This followed a 0.8 percent September increase. Computers and electronic products, down three of the last four months, drove the decrease, $0.4 billion or 1.0 percent to $43.1 billion. 

Nondefense new orders for capital goods in October decreased $3.3 billion or 4.2 percent to $75.3 billion. Shipments decreased $1.9 billion or 2.4 percent to $77.4 billion. Unfilled orders decreased $2.1 billion or 0.3 percent to $715.5 billion. Inventories increased less than $0.1 billion or virtually unchanged to $180.1 billion. Defense new orders for capital goods in October decreased $2.3 billion or 16.6 percent to $11.5 billion. Shipments increased $0.3 billion or 2.9 percent to $12.1 billion. Unfilled orders decreased $0.6 billion or 0.4 percent to $153.4 billion. Inventories increased $0.1 billion or 0.3 percent to $22.8 billion.




Wednesday November 21 2018
US Jobless Claims Rise Unexpectedly
DOL | Stefanie Moya | stefanie.moya@tradingeconomics.com

The number of Americans filling for unemployment benefits rose by 3 thousand to 224 thousand in the week ending November 17 from the previous week's upwardly revised level of 221 thousand and compared with market expectations of 215 thousand. It was the highest level since the week ending June 30. Claims for North Carolina and Florida continued to be affected by Hurricanes Florence and Michael, respectively.

The 4-week moving average was 218,500, an increase of 2,000 from the previous week's revised average. The previous week's average was revised up by 1,250 from 215,250 to 216,500.

According to unadjusted data, the biggest gains in claims were registered in Illinois (+2,193), Minnesota (+1,744), Ohio (+615) and  Iowa (+407) while the largest declines were seen in California (-6,401), New Jersey (-2,425), New York (-1,496) and Florida (-1,198).

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending November 10, unchanged from the previous week's unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending November 10 was 1,668,000, a decrease of 2,000 from the previous week's revised level. The previous week's level was revised down by 6,000 from 1,676,000 to 1,670,000. The 4-week moving average was 1,649,750, an increase of 7,500 from the previous week's revised average. The previous week's average was revised down by 1,500 from 1,643,750 to 1,642,250.




Tuesday November 20 2018
US Housing Starts Rise Slightly Less than Expected
US Census Bureau | Joana Taborda | joana.taborda@tradingeconomics.com

Housing starts in the US increased 1.5 percent from a month earlier to an annualized rate of 1,228 thousand in October of 2018, following an upwardly revised 5.5 percent drop in September and compared with market expectations of a 1.6 percent rise. The multi-family segment led the rise while construction of single-family houses declined for a second month. Starts rebounded in the South after being hurt by Hurricane Florence in September but fell in the Northeast and the West.

Single-family homebuilding, which accounts for the largest share of the housing market, went down 1.8 percent to a rate of 865 thousand units while starts for the volatile multi-family housing segment jumped 6.2 percent to a rate of 343 thousand. Starts increased in the South (4.7 percent to 596 thousand) and the Midwest (32.9 percent to 210 thousand). Meanwhile, declines were seen in the Northeast (-34.1 percent to 87 thousand) and the West (-4.6 percent to 335 thousand). Starts for September were revised to 1,210 thousand from 1,201 thousand.

Building permits fell 0.6 percent from the previous month to a seasonally adjusted annual rate of 1,263 thousand in October 2018, while markets were expecting a bigger 0.8 percent drop. Single-family authorizations declined 0.6 percent to 849 thousand and multi-family permits went down 0.5 percent to 414 thousand. Across regions, permits fell in the South (-2.4 percent to 648 thousand) and West (-7.9 percent to 313 thousand), but went up in the Midwest (9.4 percent to 187 thousand) and Northeast (21.1 percent to 115 thousand). Permits for September were revised to 1,263 thousand from 1,241 thousand.

Year-on-year, housing starts fell 2.9 percent and building permits went down 6 percent.




Friday November 16 2018
US Industrial Output Growth Weaker than Expected
Federal Reserve | Joana Ferreira | joana.ferreira@tradingeconomics.com

US industrial output edged up 0.1 percent from a month earlier in October 2018, following a downwardly revised 0.2 percent advance in September and missing market expectations of a 0.2 percent gain. An increase in manufacturing production was partially offset by declines in both mining and utilities output. Hurricanes lowered the level of industrial production in both September and October, but their effects appear to be less than 0.1 percent per month.

Manufacturing production moved up 0.3 percent in October, the same pace as in the previous month and marking its fifth consecutive monthly increase. Durable manufacturing rose 0.5 percent, the same as in September, due to production of machinery (1.2 percent vs 0.9 percent); computer and electronic products (0.2 percent vs 0.1 percent); primary metals (3 percent vs 0.9 percent); and fabricated metal products (0.2 percent vs 0.1 percent). On the other hand, there was a contraction in production of both motor vehicles and parts (-2.8 percent vs 1.3 percent) and electrical equipment, appliances, and components (-0.3 percent vs -0.1 percent). In addition, nondurable manufacturing edged up 0.2 percent, after being unchanged in September, due to increases in production of food, beverage, and tobacco products (0.5 percent vs 0.3 percent) and chemicals (0.3 percent vs -0.4 percent). By contrast, petroleum and coal products output contracted (-1.1 percent vs 0.5 percent).

Mining output declined 0.3 percent in October after a 0.1 percent fall in September. After reaching an all-time high in August, primarily as a result of gains in the oil and gas sector, production slipped slightly over the past two months.

The index for utilities dropped 0.5 percent in October, following a 0.1 percent contraction in the previous month, as a decrease for electric utilities (-1.9 percent vs -0.6 percent) was partially offset by a large increase for natural gas utilities (8.6 percent vs 3.4 percent).

Capacity utilization for the industrial sector was 78.4 percent, a rate that is 1.4 percentage points below its long-run (1972–2017) average. Capacity utilization for manufacturing edged up in October to 76.2 percent—with gains for durables and nondurables and a loss for other manufacturing (publishing and logging)—but it was still 2.1 percentage points below its long-run average. The utilization rate for mining fell to 92.7 percent but remained well above its long-run average of 87.0 percent. The operating rate for utilities moved down to 77.3 percent, a rate that is 8.0 percentage points below its long-run average.




Thursday November 15 2018
US Retail Sales Rise the Most in 5 Months
US Census Bureau | Joana Ferreira | joana.ferreira@tradingeconomics.com

US retail trade rose by 0.8 percent from a month earlier in October 2018, following a revised 0.1 percent drop in September and beating market expectations of a 0.5 percent gain. This was the largest increase in retail trade since May.

10 of 13 major retail categories showed month-over-month increases.

Sales at motor vehicle & parts dealers rebounded 1.1 percent in October (vs -0.1 percent in September), likely as residents in areas affected by Florence replaced damaged cars, and those at gasoline stations jumped 3.5 percent (vs -0.4 percent in September) on the back of higher gasoline prices. In addition, spending at building material stores advanced 1 percent (vs 0.1 percent in September) probably boosted by rebuilding efforts in areas devastated by Florence, and receipts at electronics & appliance stores surged 0.7 percent (vs -1.5 percent in September). Sales also rose at: food & beverage stores (0.3 percent vs 0.4 percent); clothing & clothing accessories stores (0.5 percent vs 0.8 percent); hobby, musical instrument and book stores (0.5 percent vs -1.3 percent); general merchandise stores (0.5 percent vs flat reading); miscellaneous store retailers (0.6 percent vs -0.5 percent); online and mail-order retail trade (0.4 percent vs 1.3 percent).

Meanwhile, receipts at furniture & home furniture stores fell 0.3 percent (vs 0.5 percent in September) and those at restaurants and bars dropped 0.2 percent (vs -1.5 percent in September). Spending at health & personal care stores was unchanged last month (vs -0.1 percent in September).

Excluding automobiles, gasoline, building materials and food services, retail sales advanced 0.3 percent in October after a downwardly revised 0.3 percent gain in September.

Year-on-year, retail trade grew 4.6 percent in October, compared with a 4.2 percent rise in September.





Thursday November 15 2018
US Jobless Claims Unexpectedly Rise to 216K
DOL | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The number of Americans filling for unemployment benefits rose by 2 thousand to 216 thousand in the week ending November 10 from the previous week's unrevised level of 214 thousand while markets had expected a drop to 212 thousand. However, the Veterans Day holiday was observed on Monday which could have influenced the data. Claims for North Carolina continued to be affected by Hurricane Florence while in Florida and Georgia they were impacted by Hurricane Michael.

The 4-week moving average was 215,250, an increase of 1,500 from the previous week's unrevised average of 213,750. 

According to unadjusted data, the biggest rises in claims were seen in California (+3,735), New York (+3,682), New Jersey (+2,801) and Minnesota (+2,154) while the largest declines were registered in Michigan (-3,913), North Carolina (-1,670) and Texas (-1,246). New applications for US unemployment aid also went up in Georgia (+807) but they fell in Florida (-337).

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending November 3, an increase of 0.1 percentage point from the previous week's unrevised rate. 

The advance number for seasonally adjusted insured unemployment during the week ending November 3 was 1,676,000, an increase of 46,000 from the previous week's revised level. The previous week's level was revised up 7,000 from 1,623,000 to 1,630,000. Figures came above market forecasts of 1,630,000. The 4-week moving average was 1,643,750, an increase of 8,750 from the previous week's revised average. The previous week's average was revised up by 1,750 from 1,633,250 to 1,635,000. 


Wednesday November 14 2018
US Inflation Rate Rises to 2.5%, Matches Forecasts
BLS | Joana Taborda | joana.taborda@tradingeconomics.com

Annual inflation rate in the US increased to 2.5 percent in October of 2018 from 2.3 percent in September. Figures match market expectations, mainly due to prices of fuel oil and gasoline. On a monthly basis, consumer prices increased 0.3 percent, higher than 0.1 percent in September and matching forecasts. It is the highest monthly gain in nine months, mainly due to gasoline.

Year-on-year, prices rose faster for fuel oil (26.2 percent compared to 23.4 percent in September); gasoline (16.1 percent compared to 9.1 percent); and rebounded for electricity (0.7 percent compared to -1.2 percent). On the other hand, inflation slowed for shelter (3.2 percent compared to 3.3 percent); transportation services (3.8 percent compared to 4 percent); food (1.2 percent compared to 1.4 percent); medical care services (1.9 percent compared to 2 percent); and was steady for new vehicles (0.5 percent, the same as in September). Also, prices fell for apparel (-0.4 percent compared to -0.6 percent); and utility piped gas service (-2.1 percent compared to -1.2 percent).  

Excluding food and energy, core inflation edged down to 2.1 percent from 2.2 percent, below forecasts of 2.2 percent. 

On a monthly basis, consumer prices increased 0.3 percent, higher than 0.1 percent in September and in line with forecasts. An increase in the gasoline index was responsible for over one-third of the increase; advances in the indexes for shelter, used cars and trucks, and electricity also contributed. The increases in the gasoline and electricity indexes led to a 2.4 percent rise in the energy index. The food index, in contrast, declined slightly in October. 

Excluding food and energy, core consumer prices edged up 0.2 percent, following a 0.1 percent gain in September and matching forecasts. Along with the indexes for shelter and for used cars and trucks, the indexes for medical care, household furnishings and operations, motor vehicle insurance, and tobacco all increased in October. The indexes for communication, new vehicles, and recreation all declined. 




Tuesday November 13 2018
US Government Budget Deficit Widens in October
US Treasury | Joana Taborda | joana.taborda@tradingeconomics.com

The US government budget deficit increased to USD 100 billion in October 2018 from USD 63 billion in the same month of the previous year, matching market expectations. Outlays increased 18.3 percent to USD 353 billion while receipts climbed at a softer 7.4 percent to USD 253 billion.

Outlays rose 18 percent from a year earlier and totaled USD 353 billion, as social security accounted for USD 84 billion, defense for USD 69 billion, Medicare for USD 53 billion, health for USD 44 billion, net interest for USD 32 billion, income security for USD 32 billion, veterans' benefits and services for USD 17 billion, agriculture for USD 8 billion, transportation for USD 8 billion and other expenses for USD 7 billion. 

Meantime, receipts increased at a softer 7 percent to USD 253 billion, as individual income taxes accounted for USD 129 billion, social security and other payroll taxes for USD 87 billion, excise taxes for USD 15 billion, corporate income taxes for USD 8 billion, miscellaneous receipts for USD 7 billion, custom duties for USD 6 billion and estate gift taxes for USD 2 billion. 

When accounting for calendar adjustments, the government's deficit was USD 110 billion compared to USD 111 billion in the same month of the previous year.

October is the first month of the new 2018/2019 fiscal year. For the previous 2017/2018 fiscal year, the budget gap was USD 779 billion, the biggest budget deficit since 2012. 




Friday November 09 2018
US Consumer Sentiment Falls Less than Expected
University of Michigan | Joana Taborda | joana.taborda@tradingeconomics.com

The University of Michigan's consumer sentiment for the US fell to 98.3 in November of 2018 from 98.6 in October but slightly higher than market expectations of 98. It is the lowest reading in three months, mainly due to a fall in consumer expectations, preliminary estimates showed. Data was collected until Wednesday night so there was only a one-day overlap after the mid-term election results were known by consumers.

The gauge for consumer expectations declined to 88.7 from 89.3 in October while the current economic conditions subindex edged up to 113.2 from 113.1. Inflation expectations for the year ahead eased to 2.8 percent from 2.9 percent while the 5-year outlook rose to 2.6 percent from 2.4 percent. 

Consumer sentiment remained virtually unchanged in early November from its October reading. Importantly, interviewing went through Wednesday night so there was only a one-day overlap after the mid-term election results were known by consumers. Those few cases held expectations that were identical with the data collected earlier in the month, which is not so surprising given that the split between the House and Senate was widely anticipated. The unchanged data meant that the Sentiment Index remained higher thus far in 2018 (98.4) than in any prior year since 2000. The stability of consumer sentiment at high levels acts to mask some important underlying shifts. Income expectations have improved and consumers anticipate continued robust growth in employment, but consumers also anticipate rising inflation and higher interest rates. While these positive and negative changes act to offset each other in the aggregate, younger consumers have benefited most from more positive income trends and older consumers are more likely to complain about the erosion of their living standards due to rising prices; rising interest rates weigh heavily on younger consumers who are more likely to borrow, and older consumers are more likely to benefit from higher returns on their savings. The renewed strength in nominal income expectations is critical to overall spending prospects. Among the working age population, those between the ages of 25 and 54, the anticipated annual gain in nominal household income was 3.6% in November, the best in the past decade.