Wednesday May 22 2019
Fed Policymakers Pledge to Remain Patient on Rates: Minutes
Federal Reserve | Joana Ferreira | joana.ferreira@tradingeconomics.com

Fed officials agreed that a patient approach to monetary policy would likely remain appropriate for some time even if global conditions continue to improve, especially in an environment of moderate economic growth and muted inflation pressures, minutes of the May meeting showed. The Committee also noted that it is prepared to adjust the size and composition of the balance sheet to achieve its macroeconomic objectives.

Excerpts from the minutes of the Federal Open Market Committee, April 30-May 1, 2019:

Participants commented on risks associated with their outlook for economic activity over the medium term. Some participants viewed risks to the downside for real GDP growth as having decreased, partly because prospects for a sharp slowdown in global economic growth, particularly in China and Europe, had diminished. These improvements notwithstanding, most participants observed that downside risks to the outlook for growth remain.

In their discussion of monetary policy, participants agreed that it would be appropriate to maintain the current target range for the federal funds rate at 2-1/4 to 2-1/2 percent. Participants judged that the labor market remained strong, and that information received over the intermeeting period showed that economic activity grew at a solid rate. However, both overall inflation and inflation for items other than food and energy had declined and were running below the Committee's 2 percent objective. A number of participants observed that some of the risks and uncertainties that had surrounded their outlooks earlier in the year had moderated, including those related to the global economic outlook, Brexit, and trade negotiations. That said, these and other sources of uncertainty remained. In light of global economic and financial developments as well as muted inflation pressures, participants generally agreed that a patient approach to determining future adjustments to the target range for the federal funds rate remained appropriate. Participants noted that even if global economic and financial conditions continued to improve, a patient approach would likely remain warranted, especially in an environment of continued moderate economic growth and muted inflation pressures.

Participants discussed the potential policy implications of continued low inflation readings. Many participants viewed the recent dip in PCE inflation as likely to be transitory, and participants generally anticipated that a patient approach to policy adjustments was likely to be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective. Several participants also judged that patience in adjusting policy was consistent with the Committee's balanced approach to achieving its objectives in current circumstances in which resource utilization appeared to be high while inflation continued to run below the Committee's symmetric 2 percent objective. However, a few participants noted that if the economy evolved as they expected, the Committee would likely need to firm the stance of monetary policy to sustain the economic expansion and keep inflation at levels consistent with the Committee's objective, or that the Committee would need to be attentive to the possibility that inflation pressures could build quickly in an environment of tight resource utilization. In contrast, a few other participants observed that subdued inflation coupled with real wage gains roughly in line with productivity growth might indicate that resource utilization was not as high as the recent low readings of the unemployment rate by themselves would suggest. Several participants commented that if inflation did not show signs of moving up over coming quarters, there was a risk that inflation expectations could become anchored at levels below those consistent with the Committee's symmetric 2 percent objective—a development that could make it more difficult to achieve the 2 percent inflation objective on a sustainable basis over the longer run. Participants emphasized that their monetary policy decisions would continue to depend on their assessments of the economic outlook and risks to the outlook, as informed by a wide range of data.




Friday May 17 2019
US Consumer Sentiment Hits 15-Year High
University of Michigan | Joana Ferreira | joana.ferreira@tradingeconomics.com

The University of Michigan's consumer sentiment for the US rose to 102.4 in May 2019 from 97.2 in the previous month, easily beating market consensus of 97.5, a preliminary estimate showed. That was the highest reading since January 2004.

The consumer expectations sub-index jumped to 96.0 in May from the previous month's 87.4; and the gauge for current economic conditions edged up to 112.4 from 112.3.

Inflation expectations for the year ahead rose to 2.8 percent in May from 2.5 percent in April; and the 5-year outlook increased to 2.6 percent from 2.3 percent.

"The Index of Consumer Sentiment surged in early May to its highest level in fifteen years. All of the May gain was in the Expectations Index, which also rose to its highest level since 2004, while the Current Conditions Index was virtually unchanged and well below the cyclical peak set in March 2018. Consumers viewed prospects for the overall economy much more favorably, with the economic outlook for the near and longer term reaching their highest levels since 2004. The gains were recorded mostly before the trade negotiations with China collapsed and China responded with their own tariffs. As shown in the chart, unaided references to tariffs peaked in July 2018 at 35% and have generally declined to just 16% in early May 2019. The July peak corresponds to the initial imposition of tariffs. To be sure, negative references to tariffs rose in the past week and are likely to rise further in late May and June. Those who held negative views about the impact of tariffs on the economy and pricing had values on the Expectations Index that were 25 points lower, and expected the year-ahead inflation rate to be 0.6 percentage points higher. Even apart from the direct impact of tariffs on prices, rising tariffs could cause a more general loss of confidence which could further diminish the pace of consumer spending. At present, the data point toward moderate spending growth in the year ahead. Nonetheless, the data indicate the corrosive impact of an escalating trade war.", Surveys of Consumers chief economist, Richard Curtin, said.




Thursday May 16 2019
US Housing Starts Rise Above Forecast
US Census Bureau | Joana Ferreira | joana.ferreira@tradingeconomics.com

Housing starts in the US rose 5.7 percent from a month earlier to a seasonally adjusted annual rate of 1,235 thousand units in April 2019, more than an expected 1,205 thousand and following a revised 1.7 percent advance in March.

Single-family homebuilding, which accounts for the largest share of the housing market, rose 6.2 percent to a rate of 854 thousand units in April and starts for the volatile multi-family housing segment advanced 4.7 percent to a rate of 381 thousand units. Increases in housing starts were recorded in the Northeast (84.6 percent to 144 thousand) and Midwest (42 percent to 186 thousand), while declines were seen in the South (-5.7 percent to 581 thousand) and West (-5.5 percent to 324 thousand). Starts for March were revised to 1,168 thousand from 1,139 thousand.

Building permits were up 0.6 percent to a rate of 1,296 thousand units in April, while markets had expected a 0.5 percent gain. Permits for the volatile multi-family housing segment increased 8.9 percent to 514 thousand, while single-family authorizations fell 4.2 percent to 782 thousand. Across regions, permits were higher in the West (5.3 percent to 339 thousand) and Midwest (2.2 percent to 188 thousand), but dropped in the Northeast (-4 percent to 120 thousand) and South (-1.2 percent to 649 thousand).

Year-on-year, housing starts dropped 2.5 percent and building permits decreased 5 percent.




Thursday May 16 2019
US Jobless Claims at 1-Month Low in Latest Week
DOL | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The number of Americans filling for unemployment fell by 16 thousand to 212 thousand in the week ending May 11th 2019 from the previous week's unrevised level of 228 thousand while markets had expected a smaller drop to 220 thousand. This is the lowest level for initial claims since the week ended April 13th of 2019, as seasonal effects from the timing of Easter have faded.

The 4-week moving average was 225,000, an increase of 4,750 from the previous week's unrevised average of 220,250. 

According to unadjusted data, the largest declines were seen in New York (-15,255), Pennsylvania (-1,029) and Arizona (-631) while the biggest rises were registered in California (+1,848), Texas (+394) and Minnesota (+315).

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending May 4, unchanged from the previous week's unrevised rate. 

The advance number for seasonally adjusted insured unemployment during the week ending May 4 was 1,660,000, a decrease of 28,000 from the previous week's revised level. The previous week's level was revised up 4,000 from 1,684,000 to 1,688,000. Figures came below market consensus of 1,680,000. The 4-week moving average was 1,668,250, an increase of 1,500 from the previous week's revised average. The previous week's average was revised up by 1,000 from 1,665,750 to 1,666,750. 





Wednesday May 15 2019
US Industrial Output Falls the Most in 11 Months
Federal Reserve | Joana Ferreira | joana.ferreira@tradingeconomics.com

US industrial output dropped 0.5 percent from a month earlier in April 2019, defying market expectations of a flat reading and reversing a 0.2 percent advance in March. That was the biggest decline in industrial production since May last year.

Manufacturing output declined 0.5 percent in April after having decreased about 0.4 percent per month, on average, during the previous three months. In April, the production of durable goods fell almost 1 percent, but the index for nondurable goods only edged down. Among durables, losses of 2 percent or more were posted by machinery; electrical equipment, appliances, and components; and motor vehicles and parts. Among nondurables, the results were mixed—the largest gains were recorded by apparel and by paper and products, and the largest declines were recorded by textile and product mills and by plastics and rubber products. The index for other manufacturing (publishing and logging) declined 0.3 percent and was well below its year-earlier level.

The output of utilities fell 3.5 percent in April, with declines in the indexes for both natural gas and electric utilities; demand for heating decreased last month because of temperatures that were warmer than normal. After having fallen for three consecutive months, mining output stepped up 1.6 percent in April and was 10.4 percent above its level of a year earlier. The increase in the mining index for April reflected gains in the oil and gas sector as well as a jump in coal mining that followed a few months of declines.

Capacity utilization for manufacturing dropped 0.5 percentage point in April to 75.7 percent, a rate that is 2.6 percentage points below its long-run average. The utilization rate for durable manufacturing declined, while the rates for nondurable manufacturing and for other manufacturing (publishing and logging) were little changed. Capacity utilization for mining increased to 91.4 percent and remained well above its long-run average of 87.1 percent. The utilization rate for utilities dropped to 76.2 percent and was more than 9 percentage points below its long-run average.




Wednesday May 15 2019
US Retail Sales Unexpectedly Fall
US Census Bureau | Joana Ferreira | joana.ferreira@tradingeconomics.com

US retail trade dropped 0.2 percent from a month earlier in April 2019, following an upwardly revised 1.7 percent growth in March, which was the biggest increase in sales for one-and-a-half year. April's reading came in below market expectations of a 0.2 percent advance.

6 of 13 major retail categories showed month-over-month decreases.

Receipts at motor vehicle & parts dealers fell 1.1 percent, after a 3.2 percent increase in the previous month; and those at building material stores slumped 1.9 percent, reversing a 0.8 percent gain in March. In addition, sales at electronics and appliances stores were down 1.3 percent, following a 1.2 percent rise in the previous period. Sales also fell at: health & personal care stores (-0.2 percent vs 0.6 percent); clothing stores (-0.2 percent vs 2.1 percent); and online and mail-order trade (-0.2 percent vs 1 percent). Meanwhile, trade was unchanged at furniture & home furniture stores (vs 1 percent in March) and miscellaneous store retailers (vs 1.4 percent in March).

By contrast, receipts increased at: gasoline stations (1.8 percent vs 3.3 percent); hobby, musical instrument and book stores (0.2 percent vs -0.3 percent); restaurants and bars (0.2 percent vs 1 percent); food & beverage stores (0.2 percent vs 1.5 percent); and general merchandise stores (0.2 percent vs 0.7 percent)

Excluding automobiles, gasoline, building materials and food services, retail sales were flat in April after a 1.1 percent rise in March.

Year-on-year, retail trade growth slowed to 3.1 percent from 3.8 percent in the previous month.




Friday May 10 2019
US Budget Surplus Narrows Sharply in April
US Treasury | Joana Ferreira | joana.ferreira@tradingeconomics.com

The US government budget surplus narrowed to USD 160 billion in April 2019 from USD 214 billion in the same month last year and compared to market expectations of USD 165 billion. Federal spending surged 27 percent on the year while receipts were up 5 percent.

Total outlays jumped 27 percent from a year earlier to USD 375 billion, with social security accounting for USD 87 billion, Medicare for USD 55 billion, national defense for USD 55 billion, health for USD 49 billion, income security for USD 46 billion, net interest for USD 38 billion, veterans' benefits & services for USD 17 billion, education for USD 9 billion, transportation for USD 6 billion and the remaining expenses for USD 12 billion.

Meanwhile, total receipts rose 5 percent to USD 536 billion, with individual income taxes accounting for USD 333 billion, social insurance & retirement for USD 135 billion, corporate income taxes for USD 45 billion, miscellaneous for USD 8 billion, excise taxes for USD 7 billion, custom duties taxes for USD 5 billion and estate & gift taxes for 2 billion.

The deficit for the current fiscal year was USD 531 billion, higher than a USD 385 billion gap a year earlier.

When adjusted for calendar effects, the surplus in April was USD 158 billion, compared to USD 169 billion last year.




Friday May 10 2019
US Inflation Rate Rises to 5-Month High
BLS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The US annual inflation rate rose to 2 percent in April 2019 from 1.9 percent in the previous month, just below forecasts of 2.1 percent. It was the highest rate since last November, led by a rebound in energy prices.

Energy prices surged 1.7 percent, reversing a 0.4 percent fall in the previous month. Within energy commodities, prices of gasoline jumped 3.1 percent (vs -0.7 percent in March) while those of fuel oil went down 0.9 percent (vs -0.4 percent in March). Within energy services, electricity prices advanced 0.6 percent, after rising 0.3 percent in the previous period, while utility (piped) gas service cost dropped 1.9 percent (vs -1.4 percent in March). Additional upward pressure came from: medical care commodities (0.2 percent vs -0.6 percent); transportation services (1.1 percent vs 1 percent); new vehicles (1.2 percent vs 0.7 percent); and used cars and trucks (0.8 percent vs 0.4 percent).

Meanwhile, food inflation slowed to 1.8 percent from 2.1 percent in March, due in particular to food at home (0.7 percent vs 1.4 percent) while costs of food away from home rose faster (3.1 percent vs 3 percent). Inflation was unchanged for shelter (at 3.4 percent) and medical care services (at 2.3 percent), while apparel prices continued to fall (-3.0 percent vs -2.2 percent).

The core inflation rate, which excludes volatile items such as food and energy, edged up to 2.1 percent in April from 2 percent in March, matching market consensus.

On a monthly basis, consumer prices rose 0.3 percent in April, easing from a 0.4 percent gain in March, which was the biggest advance since January 2018. Energy prices continued to increase sharply (2.9 percent vs 3.5 percent) due to gasoline (5.7 percent vs 6.5 percent) and fuel oil (1.3 percent vs 2.1 percent). By contrast, food costs dropped for the first time since June 2017. Excluding food and energy, the indexes for shelter, medical care, education, and new vehicles all rose in April. The indexes for used cars and trucks, apparel, and household furnishings and operations were among those that declined over the month.




Thursday May 09 2019
US Trade Surplus Widens in March
US Census Bureau | Joana Ferreira | joana.ferreira@tradingeconomics.com

The US trade deficit widened to USD 50.0 billion in March 2019 from an eight-month low of USD 49.3 billion in the previous month and compared to market expectations of USD 50.2 billion.

Exports from the US rose USD 2.1 billion from the previous month to USD 212.0 billion in March. Goods exports increased USD 2.0 billion to USD 141.7 billion, boosted by sales of industrial supplies and materials (up USD 1.7 billion), such as natural gas liquids, fuel oil, metallurgical grade coal, and other petroleum products. In addition, exports of foods, feeds, and beverages were up USD 0.8 billion, led by soybeans. By contrast, sales of civilian aircraft dropped USD 0.7 billion. Exports of services, including maintenance and repair services, and financial services, increased less than USD 0.1 billion to USD 70.3 billion in March.

On a non seasonally adjusted basis, goods exports rose to all major trade partners: China (23.6 percent); Japan (18.3 percent); Canada (13.3 percent); the EU (7.2 percent); Mexico (8.0 percent), Brazil (22.9 percent) and OPEC (25.3 percent).

Imports to the US increased USD 2.8 billion to USD 262.0 billion. Goods imports advanced USD 2.6 billion to USD 214.1 billion, led by industrial supplies and materials (up USD 2.4 billion), in particular crude oil, organic chemicals and other petroleum products. Also, food imports rose USD 1.0 billion to the highest on record. Consumer goods imports, however, fell USD 0.7 billion amid declines in purchases of cellphones and other household goods. Imports of services, including travel and maintenance and repair services, increased USD 0.2 billion to USD 47.8 billion in March.

On a non seasonally adjusted basis, goods imports rose from the EU (18.8 percent), Canada (19.2 percent), Japan (14.6 percent), Mexico (13.5 percent), Brazil (16.4 percent) and OPEC (8.2 percent). Imports from China slumped 6.1 percent.

The politically sensitive goods trade deficit with China decreased to a five-year low of USD 20.7 billion in March from USD 24.8 billion in February. On the other hand, the trade deficit widened with the EU (USD 14.2 billion from USD 9.2 billion); Mexico (USD 9.5 billion from USD 7.4 billion); Canada (USD 1.4 billion from a surplus of USD 17 million); and Japan (USD 6.6 billion from USD 5.9 billion). Meanwhile, the trade surplus with OPEC increased to USD 1.1 billion from USD 0.4 billion in February.




Thursday May 09 2019
US Initial Jobless Claims Fall Less than Expected
DOL | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The number of Americans filling for unemployment dropped by 2 thousand to 228 thousand in the week ending May 4th 2019 from the previous week's unrevised level of 230 thousand. It compares with market expectations of 220 thousand.

The 4-week moving average was 220,250, an increase of 7,750 from the previous week's unrevised average of 212,500. 

According to unadjusted data, the largest decreases were observed in New Jersey (-6,343), Connecticut (-3,204) and California (-1,277) while the biggest rises were recorded in New York (+9,514) and Illinois (+2,098).

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending April 27, unchanged from the previous week's unrevised rate. 

The advance number for seasonally adjusted insured unemployment during the week ending April 27 was 1,684,000, an increase of 13,000 from the previous week's unrevised level of 1,671,000. Figures came below market consensus of 1,670,000. The 4-week moving average was 1,665,750, a decrease of 8,000 from the previous week's unrevised average of 1,673,750.