Friday December 14 2018
US Factory Growth Lowest in Over a Year
Markit | Joana Taborda |

The IHS Markit US Manufacturing PMI fell to 53.9 in December of 2018 from 55.3 in November, below market expectations of 55.1. The reading pointed to the slowest expansion in factory activity since November of 2017, as new orders and employment rose at a slower pace, preliminary estimates showed. Also, the near-term outlook has become less favourable.

The fall in the headline PMI mainly reflected weaker contributions from new orders and employment growth at the end of the year.

The rate of manufacturing job creation was the softest since August 2017. More cautious staff hiring policies were partly due to a drop in business optimism to its lowest for 26 months, which a number of firms attributed to concerns about the outlook for the global economy. Some firms also commented on pressure on operating margins following a sustained period of rising raw material costs. 

On the other hand, manufacturing production volumes increased solidly in December, with the rate of expansion unchanged since the previous month.

Friday December 14 2018
US Industrial Output Rebound Beats Forecasts
Federal Reserve | Joana Ferreira |

US industrial output rose 0.6 percent from a month earlier in November 2018, following a downwardly revised 0.2 percent contraction in October and beating market expectations of a 0.3 percent gain. Mining and utilities output led the increase while manufacturing production was unchanged.

Mining output surged 1.7 percent in November after a 0.7 percent fall in October, primarily as a result of gains in oil and gas extraction, coal mining, and support activities for mining.

Utilities output rose 3.3 percent in November, following a 0.2 percent advance in October, with increases for both electric and gas utilities; natural gas distribution rose sharply in both October and November, as unseasonably cold weather supported demand for heating.

Meanwhile, manufacturing production was unchanged in November after a 0.1 percent decline in the previous month. Within durable manufacturing (0.2 percent vs -0.1 percent), primary metals posted the largest gain (2.4 percent vs 0.9 percent), followed by machinery (0.5 percent vs 0.8 percent), motor vehicles and parts (0.3 percent vs -3.1 percent), electrical equipment, appliances, and components (0.3 percent vs -0.6 percent), and computer and electronic products (0.2 percent vs -0.2 percent). On the other hand, fabricated metal products output fell 0.1 percent (vs 0.2 percent in October). Among nondurables (-0.2 percent, the same as in October), most major categories posted declines: food, beverage, and tobacco products (-0.5 percent, the same as in October); petroleum and coal products (-1.7 percent vs -1 percent); and printing and support (-1 percent vs -0.9 percent). By contrast, chemicals output grew 0.6 percent (vs 0.2 percent in October).

Capacity utilization for manufacturing edged down in November to 75.7 percent, about 2 1/2 percentage points below its long-run average, as a slight rise for durables was outweighed by declines for nondurables and other manufacturing (publishing and logging). The utilization rate for mining increased to 94.1 percent and remained well above its long-run average of 87.0 percent. The operating rate for utilities moved up to 79.4 percent, a rate that is about 6 percentage points below its long-run average.

Friday December 14 2018
US Retail Sales Rise 0.2% in November
US Census Bureau | Joana Ferreira |

US retail trade rose by 0.2 percent from a month earlier in November 2018, following an upwardly revised 1.1 percent growth in October and matching market expectations. An increase in sales of furniture, electronics and a range of other goods was partially offset by a decline in trade at gasoline stations on the back of cheaper fuel prices.

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

Sales at furniture & home furniture stores rebounded 1.2 percent (vs -0.5 percent in October) and those at electronics & appliance stores increased 1.4 percent (vs 1.7 percent in October). In addition, online and mail-order retail sales surged 2.3 percent, the largest gain in a year, after a 0.8 percent advance in October; and trade at health & personal care stores jumped 0.9 percent, reversing a 0.1 percent decline in the previous month. Sales also rose at: motor vehicle & parts dealers (0.2 percent vs 1.5 percent); food & beverage stores (0.4 percent vs 0.3 percent); hobby, musical instrument and book stores (0.4 percent vs 1.1 percent); general merchandise stores (0.4 percent vs 0.8 percent); miscellaneous store retailers (0.4 percent vs 2.2 percent).

Meanwhile, receipts at gasoline stations fell 2.3 percent, the biggest drop since May 2017, after rising 3.2 percent in October. Also, sales at building material stores decreased 0.3 percent (vs 1.5 percent in October) and those at clothing & clothing accessories stores went down 0.2 percent (vs 1.3 percent in October).

Excluding automobiles, gasoline, building materials and food services, retail sales surged 0.9 percent in November after an upwardly revised 0.7 percent increase in October.

Year-on-year, retail trade grew 4.2 percent in November, compared with an upwardly revised 4.8 percent rise in the previous month.

Friday December 14 2018
US Budget Deficit Hits Record for November Month
US Treasury | Luisa Carvalho |

The US government budget deficit went up to USD 205 billion in November 2018 from USD 139 billion in the same month of the previous year, above market expectations of USD 188 billion. It is the widest budget gap on record for a November month, as spending surged 18.4 percent to USD 411 billion while revenues fell 1.2 percent to USD 206 billion.

Outlays increased 18.4 percent from a year earlier and totaled USD 411 billion, as social security accounted for USD 84 billion, Medicare for USD 77 billion, defense for USD 62 billion, income security for USD 46 billion, health for USD 42 billion, net interest for USD 33 billion, veterans' benefits and services for USD 26 billion, transportation and education for USD 8 billion each and other expenses for USD 26 billion.

Meanwhile, receipts fell 1.2 percent to USD 206 billion, as individual income taxes accounted for USD 93 billion, social security and other payroll taxes for USD 93 billion, excise taxes for USD 8 billion, custom duties for USD 6 billion, miscellaneous receipts for USD 6 billion and estate gift taxes for USD 1 billion. Meantime, corporate income taxes represented USD -2 billion.

In the first two months of the fiscal year that began on October 1st, the budget gap widened by 51 percent to USD 305.4 billion compared to USD 201.8 billion the same period a year earlier.

Thursday December 13 2018
US Jobless Claims Drop to Near 49-Year Low
DOL | Agna Gabriel |

The number of Americans filling for unemployment benefits decreased by 27 thousand to a near 49-year low of 206 thousand in the week ending December 8 from the previous week's revised level of 233 thousand. Claims declined for the second straight week and by the most since April 2015. It compares with market expectations of a decline to 225 thousand.

The 4-week moving average was 224,750, a decrease of 3,750 from the previous week's revised average. The previous week's average was revised up by 500 from 228,000 to 228,500.

According to unadjusted data, the largest declines were seen in Pennsylvania (-10,604); New York (-8,853); California (-6,990) and Georgia (-4,010) while the biggest increases were reported in Colorado (+467); Massachusetts (+372) and Idaho (+308).

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending December 1, 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 December 1 was 1,661,000, an increase of 25,000 from the previous week's revised level. Figures came above market expectations of 1,650,000. The previous week's level was revised up 5,000 from 1,631,000 to 1,636,000. The 4-week moving average was 1,665,750, a decrease of 2,500 from the previous week's revised average. The previous week's average was revised up by 1,250 from 1,667,000 to 1,668,250.

Wednesday December 12 2018
US Inflation Rate Lowest in 9 Months
BLS | Joana Taborda |

Annual inflation rate in the US fell to 2.2 percent in November of 2018 from 2.5 percent in October, matching market expectations. It is the lowest reading since February. On a monthly basis, consumer prices were unchanged after rising 0.3 percent in October and also in line with forecasts. The gasoline index declined 4.2 percent, offsetting increases in an array of indexes including shelter and used cars and trucks.

Year-on-year, prices slowed for fuel oil (16.1 percent compared to 26.2 percent in October); gasoline (5 percent compared to 16.1 percent); electricity (0.6 percent compared to 0.7 percent); transportation services (3.3 percent compared to 3.8 percent); new vehicles (0.3 percent compared to 0.5 percent); medical care commodities (0.6 percent compared to 0.7 percent). Also, cost fell for apparel (-0.4 percent, the same as in October); and utility piped gas service (-2.1 percent, the same as in October). On the other hand, inflation was steady for shelter (3.2 percent) and went up food (1.4 percent compared to 1.2 percent); medical care services (2.4 percent compared to 1.9 percent); and used cars and trucks (2.3 percent compared to 0.4 percent). 

Excluding food and energy, consumer prices increased 2.2 percent over a year earlier, higher than 2.1 percent in October and in line with forecasts.

On a monthly basis, the gasoline index declined 4.2 percent in November, offsetting increases in an array of indexes including shelter and used cars and trucks. Other major energy component indexes were mixed, with the index for fuel oil falling but the indexes for electricity and natural gas rising. The food index rose in November, with the indexes for food at home and food away from home both increasing.  

The all items less food and energy index increased 0.2 percent in November, the same as in October and also in line with forecasts. Along with the indexes for shelter and used cars and trucks, the indexes for medical care, recreation, and water and sewer and trash collection also increased. The indexes for wireless telephone services, airline fares, and motor vehicle insurance declined in November. 

Friday December 07 2018
US Consumer Sentiment Above Forecasts
University of Michigan | Joana Taborda |

The University of Michigan's consumer sentiment for the US was steady at 97.5 in December of 2018, the same as in the previous month and above market expectations of 97, preliminary estimates showed. In the last 2 years, consumer sentiment has been above 90, a pattern not seen since 1997 to 2000.

The gauge for consumer expectations declined to 86.1 from 88.1 in November while the current economic conditions subindex increased to 115.2 from 112.3 in November. Inflation expectations for the year ahead eased to 2.7 percent from 2.8 percent and the 5-year outlook fell to 2.4 percent from 2.6 percent. 

Consumer sentiment was unchanged from last month's reading and has remained at very favorable levels since the start of 2017. In the two years from January 2017 to December 2018, the Sentiment Index was consistently above 90.0, averaging 97.5, identical to the early December reading. The last time the Sentiment Index was consistently above 90.0 for at least as long was from 1997 to 2000, recording a four-year average of 105.3. There are a number of plausible causes for the difference in consumer optimism from the late 1990's to today, most of which revolve around job and wage prospects. As noted in last month's report, as long as job and income growth remain strong, rising prices and interest rates will not cause substantial cutbacks in spending. In the early December survey, however, consumers did mention hearing much more negative news about future job prospects. Moreover, most consumers understand that the goal of increasing interest rates is to slow the pace of economic growth. In past expansions, there was plenty of room between low and high interest rates to nudge up rates without damaging consumer spending. The gap has been squeezed to just a few percentage points and more caution is now warranted.

Friday December 07 2018
US Jobless Rate Unchanged at 49-Year Low
BLS | Joana Ferreira |

The US unemployment rate was unchanged at a 49-year low of 3.7 percent in November 2018, in line with market expectations. The number of unemployed decreased by 100 thousand to 5.98 million and employment rose by 233 thousand to 156.80 million.

Among the major worker groups, the unemployment rates for adult men (3.3 percent), adult women (3.4 percent), teenagers (12.0 percent), Whites (3.4 percent), Blacks (5.9 percent), Asians (2.7 percent), and Hispanics (4.5 percent) showed little or no change in November.

The number of long-term unemployed (those jobless for 27 weeks or more) declined by 120,000 to 1.3 million in November. These individuals accounted for 20.8 percent of the unemployed.

Both the labor force participation rate, at 62.9 percent, and the employment-population ratio, at 60.6 percent, were unchanged in November.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers), at 4.8 million, changed little in November. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.

In November, 1.7 million persons were marginally attached to the labor force, an increase of 197,000 from a year earlier. (Data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. Among the marginally attached, there were 453,000 discouraged workers in November, essentially unchanged from a year earlier. (Data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.2 million persons marginally attached to the labor force in November had not searched for work for reasons such as school attendance or family responsibilities.

Friday December 07 2018
US Economy Adds Less Jobs than Expected
BLS | Joana Taborda |

Non farm payrolls in the United States increased by 155 thousand in November of 2018, following a downwardly revised 237 thousand in October and well below market expectations of 200 thousand. Job gains occurred in health care, in manufacturing, and in transportation and warehousing.

Health care employment rose by 32,000 in November. Within the industry, job gains occurred in ambulatory health care services (+19,000) and hospitals (+13,000). Over the year, health care has added 328,000 jobs.

In November, manufacturing added 27,000 jobs, with increases in chemicals (+6,000) and primary metals (+3,000). Manufacturing employment has increased by 288,000 over the year, largely in durable goods industries.

Employment in transportation and warehousing rose by 25,000 in November. Job gains occurred in couriers and messengers (+10,000) and in warehousing and storage (+6,000). Over the year, transportation and warehousing has added 192,000 jobs.

In November, employment in professional and business services continued on an upward trend (+32,000). The industry has added 561,000 jobs over the year.

Retail trade employment changed little in November (+18,000). Job growth occurred in general merchandise stores (+39,000) and miscellaneous store retailers (+10,000). These gains were offset, in part, by declines in clothing and clothing accessories stores (-14,000); electronics and appliance stores(-11,000); and sporting goods, hobby, and book stores (-11,000).

Employment in other major industries--including mining, construction, wholesale trade, information, financial activities, leisure and hospitality, and government--showed little change over the month.  

The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hour to 34.4 hours in November. In manufacturing, both the workweek and overtime were unchanged (40.8 hours and 3.5 hours, respectively). The average workweek for production and nonsupervisory employees on private nonfarm payrolls held at 33.7 hours. 

In November, average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents to $27.35. Over the year, average hourly earnings have increased by 81 cents, or 3.1 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 7 cents to $22.95 in November. 

The change in total nonfarm payroll employment for October was revised down from +250,000 to +237,000, and the change for September was revised up from +118,000 to +119,000. With these revisions, employment gains in September and October combined were 12,000 less than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 170,000 per month over the last 3 months.

Thursday December 06 2018
US Services Growth Beats Forecasts: ISM
ISM | Joana Taborda |

The ISM Non-Manufacturing PMI index for the United States edged up to 60.7 in November of 2018 from 60.3 in October, beating market expectations of 59.2. The non-manufacturing sector continued to reflect strong growth in November although concerns persist about employment resources and the impact of tariffs. Yet, respondents remain positive about current business conditions and the direction of the economy.

Faster increases were seen in business activity/production (65.2 from 62.5), new orders (62.5 from 61.5), invesntories (57.5 from 56) and backlogs of orders (55.5 from 53.5). On the other hand, employment (58.4 from 59.7), supplier deliveries (56.5 from 57.5) and new export orders (57.5 from 61) slowed and price pressures intensified (64.3 from 61.7). 

The 17 non-manufacturing industries reporting growth in November — listed in order — are: Educational Services; Professional, Scientific & Technical Services; Health Care & Social Assistance; Transportation & Warehousing; Construction; Wholesale Trade; Real Estate, Rental & Leasing; Management of Companies & Support Services; Information; Finance & Insurance; Retail Trade; Other Services; Mining; Accommodation & Food Services; Public Administration; Arts, Entertainment & Recreation; and Utilities. The only industry reporting a decrease in November is Agriculture, Forestry, Fishing & Hunting.