Thursday February 21 2019
US Factory Growth Lowest since 2017: Markit
Markit | Joana Taborda | joana.taborda@tradingeconomics.com

The IHS Markit US Manufacturing PMI fell to 53.7 in february of 2019 from 54.9 in January and below market expectations of 54.7, preliminary estimates showed. The reading pointed to the slowest growth in factory activity since September of 2017, amid soft client demand, partly linked to uncertainty across manufacturing supply chains and concerns about the global trade outlook. There were also some reports that adverse weather conditions had disrupted production schedules in February.

Despite a slowdown in production and new order growth, latest data signalled another solid upturn in manufacturing employment. Moreover, input buying continued to rise at a relatively strong pace in February, which added to signs that manufacturers remain firmly in expansion mode. 

Meanwhile, input price inflation eased for the fourth month running and reached its lowest since August 2017. Survey respondents still noted that trade tariffs had pushed up the cost of imported materials, although there were some reports that prices charged by domestic steel producers had begun to moderate.




Thursday February 21 2019
US Durable Goods Orders Rise Less than Expected
US Census Bureau | Joana Ferreira | joana.ferreira@tradingeconomics.com

New orders for US manufactured durable goods rose 1.2 percent from a month earlier in December 2018, following an upwardly revised 1 percent advance in November and missing market expectations of a 1.5 percent gain. Transportation equipment drove the increase.

Demand for transport equipment increased 3.3 percent in December (vs 3.4 percent in November), led by civilian aircraft (28.4 percent vs 4.5 percent) and motor vehicles and parts (2.1 percent vs 0.4 percent), while orders for defense aircraft and parts fell sharply (-30.5 percent vs 29 percent). Demand also rose for fabricated metal products (0.3 percent vs 1.9 percent). Meanwhile, orders for computers and electronic products were unchanged (vs 0.2 percent in November) while decreases were recorded in demand for primary metals (-0.9 percent vs 1.5 percent), machinery (-0.4 percent vs -1.9 percent) and electrical equipment, appliances, and components (-0.1 percent vs -2.5 percent).

Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.7 percent in December, after falling 1 percent in November.

Excluding transportation, new orders edged up 0.1 percent (vs -0.2 percent in November). Excluding defense, new orders increased 1.8 percent (vs unchanged in November).

Shipments of manufactured durable goods in December, up four of the last five months, increased $2.1 billion or 0.8 percent to $259.7 billion. This followed a 1.0 percent November increase. Transportation equipment, also up four of the last five months, led the increase, $1.4 billion or 1.5 percent to $91.4 billion.

Unfilled orders for manufactured durable goods in December, down three consecutive months, decreased $1.1 billion or 0.1 percent to $1,180.1 billion. This followed a 0.2 percent November decrease. Transportation equipment, also down three consecutive months, drove the decrease, $1.2 billion or 0.1 percent to $811.1 billion.

Inventories of manufactured durable goods in December, up twenty-three of the last twenty-four months, increased $0.9 billion or 0.2 percent to $414.7 billion. This followed a 0.4 percent November increase. Primary metals, up twenty-five of the last twenty-six months, led the increase, $0.4 billion or 1.1 percent to $36.6 billion.

Nondefense new orders for capital goods in December increased $2.8 billion or 3.7 percent to $77.8 billion. Shipments increased $0.4 billion or 0.5 percent to $80.0 billion. Unfilled orders decreased $2.2 billion or 0.3 percent to $708.1 billion. Inventories increased $0.5 billion or 0.3 percent to $181.5 billion. Defense new orders for capital goods in December decreased $1.0 billion or 7.0 percent to $13.3 billion. Shipments increased $0.5 billion or 4.1 percent to $12.5 billion. Unfilled orders increased $0.8 billion or 0.5 percent to $157.1 billion. Inventories decreased $0.2 billion or 1.0 percent to $22.7 billion




Thursday February 21 2019
US Jobless Claims Fall More than Expected in Latest Week
DOL | Stefanie Moya | stefanie.moya@tradingeconomics.com

The number of Americans filling for unemployment benefits fell by 23 thousand to 216 thousand in the week ending February 16 from the previous week’s revised level of 239 thousand. It compares with market expectations of 229 thousand.

The 4-week moving average was 235,750, an increase of 4,000 from the previous week's unrevised average of 231,750. This is the highest level for this average since January 20, 2018 when it was 237,500. 

According to unadjusted data, the biggest declines were registered in Wisconsin (-4,560); Michigan (-4,377); Pennsylvania (-4,163) and New York (-3,730) while the largest gains were seen in Washington (+1,670); Virginia (+779) and Nevada (+271).

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending February 9, unchanged from the previous week's unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending February 9 was 1,725,000, a decrease of 55,000 from the previous week's revised level. The previous week's level was revised up 7,000 from 1,773,000 to 1,780,000. The 4-week moving average was 1,754,750, an increase of 2,750 from the previous week's revised average. The previous week's average was revised up by 1,750 from 1,750,250 to 1,752,000. 




Wednesday February 20 2019
Fed Policymakers Unsure on Future Rate Hikes: Minutes
Federal Reserve | Joana Ferreira | joana.ferreira@tradingeconomics.com

Many Fed officials suggested that it was not yet clear what adjustments to the target range for the federal funds rate may be appropriate later this year, minutes of the January meeting showed. Policymakers also noted that some risks to the downside had increased and pledged to end reductions to its balance sheet before the end of 2019.

Excerpts from the minutes of the Federal Open Market Committee, January 29-30, 2019:

Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve's asset holdings later this year. Such an announcement would provide more certainty about the process for completing the normalization of the size of the Federal Reserve's balance sheet. A substantial majority expected that when asset redemptions ended, the level of reserves would likely be somewhat larger than necessary for efficient and effective implementation of monetary policy; if so, many suggested that some further very gradual decline in the average level of reserves, reflecting the trend growth of other liabilities such as Federal Reserve notes in circulation, could be appropriate. In these participants' view, this process would allow the Federal Reserve to arrive slowly at an efficient level of reserves while maintaining good control of short-term interest rates without needing to engage in more frequent open market operations. A few participants judged that there would be little benefit to allowing reserves to continue to fall after the end of redemptions or that this approach could have costs, such as an undue risk of volatility in short-term interest rates, that would exceed its benefits. These participants thought that upon ending asset redemptions, the Federal Reserve should begin adding to its assets to offset growth in nonreserve liabilities, so as to keep the average level of reserves relatively stable. A couple of participants suggested that a ceiling facility to mitigate temporary unexpected pressures in reserve markets could play a useful role in supporting policy implementation at lower levels of reserves.

Participants commented on a number of risks associated with their outlook for economic activity, the labor market, and inflation over the medium term. Participants noted that some risks to the downside had increased, including the possibilities of a sharper-than-expected slowdown in global economic growth, particularly in China and Europe, a rapid waning of fiscal policy stimulus, or a further tightening of financial market conditions. An increase in some foreign and domestic government policy uncertainties, including those associated with Brexit, an escalation in international trade policy tensions, and the potential for additional extended federal government shutdowns were also cited as downside risks. A few participants expressed concern that longer-run inflation expectations may be lower than levels consistent with the Committee's 2 percent inflation objective. Several participants judged that risks that could lead to higher-than-expected inflation had diminished relative to downside risks. The potential that various sources of uncertainty might abate more quickly than expected was mentioned as a potential upside risk for the economic outlook.

Participants noted that maintaining the current target range for the federal funds rate for a time posed few risks at this point. The current level of the federal funds rate was at the lower end of the range of estimates of the neutral policy rate. Moreover, inflation pressures were muted, and asset valuations were less stretched than they had been a few months earlier. Many participants suggested that it was not yet clear what adjustments to the target range for the federal funds rate may be appropriate later this year; several of these participants argued that rate increases might prove necessary only if inflation outcomes were higher than in their baseline outlook. Several other participants indicated that, if the economy evolved as they expected, they would view it as appropriate to raise the target range for the federal funds rate later this year.




Friday February 15 2019
US Consumer Sentiment Rises in February
University of Michigan | Joana Taborda | joana.taborda@tradingeconomics.com

The University of Michigan's consumer sentiment for the US rose to 95.5 in February of 2019 from 91.2 in January, preliminary estimates showed. The early February gains reflect the end of the partial government shutdown as well as a more fundamental shift in consumer expectations due to the Fed's pause in raising interest rates.

The current economic conditions subindex increased to 110 from 108.8 in January and the gauge for consumer expectations went up to 86.2 from 79.9. Inflation expectations for the year ahead declined to 2.5 percent from 2.7 percent and the 5-year outlook dropped to 2.3 percent from 2.6 percent.

The lingering impact of the shutdown was responsible for some of the negative economic evaluations, and, at the time that these interviews were conducted, uncertainty about whether a second shutdown would occur continued to have a slight depressing impact on confidence. Although the majority of consumers expected some additional rate hikes during the year ahead, that proportion has shrunk to the smallest level in the past two years. Perhaps more importantly, consumers' long term inflation expectations fell to the lowest level recorded in the past half century. While nominal income expectations remained at modest levels, consumers more frequently expected gains in their inflation-adjusted incomes in early February than at any other time in more than fifteen years. The data indicate that personal consumption expenditures will remain the strongest sector in the national economy in 2019--up by 2.7% compared with a GDP gain of 2.2%. The data suggest that the Fed will find it even harder to justify another rate hike given the record low inflation expectations; the data will also add to the debate about the evolving relationship between unemployment and inflation as consumers now anticipate lower inflation and higher unemployment.




Friday February 15 2019
US Industrial Output Falls for 1st Time in 8 Months
Federal Reserve | Joana Ferreira | joana.ferreira@tradingeconomics.com

US industrial output dropped 0.6 percent from a month earlier in January 2019, following a downwardly revised 0.1 percent growth in December and missing market expectations of a 0.1 percent gain.

Manufacturing production fell 0.9 percent in January, following a 0.8 percent rise in December. Within durable manufacturing, motor vehicles and parts posted the steepest contraction (-8.8 percent vs 4.3 percent in December), as vehicle assemblies fell to 10.6 million units at an annual rate in January (their lowest reading since May 2018) from 12.3 million units in December (their highest monthly pace since June 2016). Most other major durable goods industries also recorded decreases: machinery (-0.5 percent vs -1.1 percent); computer and electronic products (-1.4 percent vs 1.7 percent); aerospace and miscellaneous transportation equipment (-0.3 percent vs 2.7 percent); primary metals (-0.2 percent vs -0.3 percent); and nonmetallic mineral products (-0.8 percent vs 3.1 percent). By contrast, fabricated metal products output increased 0.4 percent after a 0.2 percent gain in the previous month. Among nondurables, declines in production of chemicals (-0.4 percent vs -0.2 percent) and food, beverage, and tobacco products (-0.1 percent vs 0.9 percent) were offset by an increase in petroleum and coal products output (1.5 percent vs 3.2 percent).

Mining output edged up 0.1 percent in January, easing from a 1.5 percent growth in the previous month. The output of utilities increased 0.4 percent (vs -6.9 percent in December), with natural gas utilities rising 6 percent after falling 19 percent a month earlier.

Capacity utilization for manufacturing declined 0.7 percentage point in January to 75.8 percent, about 2 1/2 percentage points below its long-run average. The utilization rate for mining fell to 94.8 percent but remained well above its long-run average of 87.1 percent. The operating rate for utilities increased to 75.4 percent, a rate that is about 10 percentage points below its long-run average.




Thursday February 14 2019
US Retail Sales Post Biggest Drop in Over 9 Years
US Census Bureau | Joana Ferreira | joana.ferreira@tradingeconomics.com

US retail trade fell by 1.2 percent from a month earlier in December 2018, following a revised 0.1 percent growth in November and missing market expectations of 0.2 percent gain. It was the steepest decline in retail sales since September 2009.

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

Receipts at gasoline stations tumbled 5.1 percent (vs -4.4 percent in November), the largest fall since February 2016, amid cheaper gasoline prices. Also, sales at hobby, musical instrument & book stores dropped 4.9 percent (vs -1.4 percent in November), the biggest drop since September 2008, and those at miscellaneous store retailers were 4.1 percent lower (vs 4 percent in November). In addition, online and mail-order retail sales slumped 3.9 percent, the biggest drop since November 2008, after a 2.8 percent growth in the previous month. Spending also decreased at: furniture & home furniture stores (-1.3 percent vs 0.5 percent); electronics & appliance stores (-0.1 percent, the same as in November); food & beverage stores (-0.4 percent vs 0.1 percent); health & personal care stores (-2 percent vs 1.3 percent); clothing & clothing accessories stores (-0.7 percent vs 0.4 percent); general merchandise stores (-0.9 percent vs 0.4 percent); and restaurants and bars (-0.7 percent, the same as in November).

Meanwhile, receipts at motor vehicle & parts dealers rose 1 percent (vs 0.7 percent in November) and those at building material stores rebounded 0.3 percent (vs -1.5 percent in November).

Excluding automobiles, gasoline, building materials and food services, retail sales dropped 1.7 percent in December after an increase of 1 percent in November. These so-called core retail sales correspond most closely with the consumer spending component of GDP.

Year-on-year, retail trade grew 2.3 percent in December, compared with a revised 4.1 percent rise in the previous month.




Thursday February 14 2019
US Jobless Claims Unexpectedly Rise in Latest Week
DOL | Agna Gabriel | agna.gabriel@tradingeconomics.com

The number of Americans filling for unemployment benefits increased by 4 thousand to 239 thousand in the week ending February 9 from the previous week’s revised level of 235 thousand. It compares with market expectations of 225 thousand.

The 4-week moving average was 231,750, an increase of 6,750 from the previous week's revised average. This is the highest level for this average since January 27, 2018 when it was 234,000. The previous week's average was revised up by 250 from 224,750 to 225,000. 

According to unadjusted data, the biggest increases were seen in Washington (+4,869); Michigan (+1,157) and Minnesota (+461) while the largest declines were reported in California (-3,112); Pennsylvania (-2,056); Ohio (-1,841) and Illinois (-1,369).

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending February 2, unchanged from the previous week's unrevised rate. 

The advance number for seasonally adjusted insured unemployment during the week ending February 2 was 1,773,000, an increase of 37,000 from the previous week's unrevised level of 1,736,000. The 4-week moving average was 1,750,250, an increase of 9,000 from the previous week's unrevised average of 1,741,250.


Wednesday February 13 2019
US Budget Deficit Larger than Expected
US Treasury | Joana Ferreira | joana.ferreira@tradingeconomics.com

The US government budget deficit narrowed to USD 14 billion in December 2018 from USD 23 billion in the same month of the previous year, above market expectations of USD 11 billion.

Outlays were down 7 percent from a year earlier and totaled USD 326 billion, with social security accounting for USD 84 billion, Medicare for USD 24 billion, defense for USD 57 billion, income security for USD 37 billion, health for USD 48 billion, net interest for USD 34 billion, veterans' benefits and services for USD 16 billion, transportation and education for USD 17 billion each and other expenses for USD 10 billion.

Meanwhile, receipts fell 4 percent to USD 313 billion, with individual income taxes accounting for USD 151 billion, social insurance and retirement for USD 95 billion, corporate income taxes for USD 47 billion, excise taxes for USD 7 billion, custom duties for USD 6 billion, miscellaneous receipts for USD 6 billion and estate gift taxes for USD 2 billion.

When taking into account calendar effects, spending was slightly higher while receipts were down 6 percent from a year earlier.




Wednesday February 13 2019
US Inflation Rate Drops to 1.6%
BLS | Joana Taborda | joana.taborda@tradingeconomics.com

Annual inflation rate in the United States slowed for the third straight month to 1.6 percent in January of 2019 from 1.9 percent in December. It is the lowest rate since June of 2017, compared to market expectations of 1.5 percent, mainly due to a sharp fall in energy prices, namely gasoline.

Year-on-year, prices fell for gasoline (-10.1 pecent compared to -2.1 percent in December); fuel oil (-8.1 percent compared to 1.9 percent); and medical care commodities (-0.3 percent compared to -0.5 percent); and were unchanged for new vehicles (0 percent compared to -0.3 percent). Also, inflation slowed for transportation services (2 percent compared to 2.8 percent); medical care services (2.4 percent compared to 2.6 percent); and was flat for food (1.6 percent); and shelter (3.2 percent). On the other hand, prices rebounded for apparel (0.1 percent compared to -0.1 percent) and went up faster for used cars and trucks (1.6 percent compared to 1.4 percent); electricity (1.3 percent compared to 1.1 percent); and utility piped gas service (4.3 percent compared to 2.3 percent). 

Excluding food and energy, consumer prices increased 2.2 percent over a year earlier, the same as in December and slightly above forecasts of 2.1 percent.

On a monthly basis, consumer prices were flat for the third straight month, compared to forecasts of a 0.1 percent rise. The energy index declined for the third consecutive month, offsetting increases in the indexes for all items less food and energy and for food. All the major energy component indexes declined in January, with the gasoline index falling 5.5 percent. The food index increased 0.2 percent, with the index for food at home rising 0.1 percent and the food away from home index increasing 0.3 percent. 

The index for all items less food and energy increased 0.2 percent in January for the fourth consecutive month, matching forecasts. The indexes for shelter, apparel, medical care, recreation, and household furnishings and operations were among the indexes that rose in January, while the indexes for airline fares and for motor vehicle insurance declined.