Thursday December 18 2014
Jobless Claims at 6-Week Low
DOL | Joana Taborda |

In the week ending December 13th, 289 thousand Americans filed for unemployment benefits, a decrease of 6,000 from the previous week's revised level of 295 thousand. It is the lowest figure in six weeks and the third consecutive fall.

The 4-week moving average was 298,750, a decrease of 750 from the previous week's revised average. The previous week's average was revised up by 250 to 299,500 from 299,250. 

The advance seasonally adjusted insured unemployment rate was 1.8 percent for the week ending December 6, down from 1.9 percent in the previous week. The advance number for seasonally adjusted insured unemployment during the week ending December 6 was 2,373,000, a decrease of 147,000 from the previous week's revised level of 2520,000.

Wednesday December 17 2014
Fed May Hike Rates By the Middle of 2015
Federal Reserve |

The Federal Reserve on Wednesday dropped a pledge to keep interest rates near zero for a "considerable time" sending a signal that it was on track to raise the borrowing cost sometime next year.

Extracts from the Federal Reserve Press Release:

Information received since the Federal Open Market Committee met in October suggests that economic activity is expanding at a moderate pace. Labor market conditions improved further, with solid job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that underutilization of labor resources continues to diminish. Household spending is rising moderately and business fixed investment is advancing, while the recovery in the housing sector remains slow. Inflation has continued to run below the Committee's longer-run objective, partly reflecting declines in energy prices. Market-based measures of inflation compensation have declined somewhat further; survey-based measures of longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators moving toward levels the Committee judges consistent with its dual mandate. The Committee sees the risks to the outlook for economic activity and the labor market as nearly balanced. The Committee expects inflation to rise gradually toward 2 percent as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate. The Committee continues to monitor inflation developments closely.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy. The Committee sees this guidance as consistent with its previous statement that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program in October, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored. However, if incoming information indicates faster progress toward the Committee's employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. 

When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

Wednesday December 17 2014
US Inflation Rate Slows to 1.3%
BLS | Joana Taborda |

US annual inflation rate eased to 1.3 percent in November from 1.7 percent in the previous three months due to a fall in energy cost. On a monthly basis, consumer prices decreased 0.3 percent, the biggest decline in six years.

Year-on-year, energy cost fell 4.8 percent, due to lower prices for energy commodities (-10.2 percent), gasoline (-10.5 percent) and fuel oil (-10.1 percent). Food prices increased 3.2 percent and electricity rose 2.8 percent. The index for all items less food and energy went up 1.7 percent, slowing from 1.8 percent in the previous month.

On a monthly basis, the gasoline index posted its sharpest decline since December 2008 and was the main cause of the decrease in the seasonally adjusted all items index. The indexes for fuel oil and natural gas also declined, and the energy index fell 3.8 percent. The food index rose 0.2 percent with major grocery store food groups mixed.

The index for all items less food and energy increased 0.1 percent in November. The shelter index rose 0.3 percent, and the indexes for medical care, airline fares, and alcoholic beverages also rose. In contrast, the indexes for apparel, used cars and trucks, recreation, household furnishings and operations, personal care, and new vehicles all declined in November.

Tuesday December 16 2014
US Factory Activity at 11-Month Low
Markit | Joana Taborda |

The Markit flash U.S. manufacturing PMI registered 53.7 in December, down from 54.8 in November. The output subindex slowed for the fourth consecutive month while employment gauge was the lowest in five months.

A weaker improvement in overall business conditions partly reflected slower output growth in December. The latest expansion of production volumes was the least marked since the snow-related slowdown seen during January. Anecdotal evidence from survey respondents suggested that a moderation in new business gains in recent months had contributed to softer output growth at their plants.

Latest data highlighted a solid rise in new business received by U.S. manufacturing companies, but the pace of expansion eased fractionally since November and was the least marked for 11 months. Some manufacturers commented that greater uncertainty about the economic outlook had resulted in softer client spending patterns. Nonetheless, export sales rebounded in the manufacturing sector, as highlighted by a moderate increase in new orders received from abroad during December.

Manufacturing payroll numbers increased for the eighteenth consecutive month in December. However, the latest survey indicated that the rate of employment growth eased to its lowest since July. Reports from survey respondents suggested that slower new business growth and reduced pressures on operating capacity had weighed on staff hiring.

Weaker output and new business growth contributed to the slowest increase in input buying since January. Meanwhile, stocks of purchases rose at a reduced rate in December and post-production inventories were pared back for the first time since June.

Meanwhile, manufacturing input cost inflation moderated for the third month running and was the lowest since April 2013. Survey respondents noted that decreased commodity prices and oil-related costs had resulted in weaker overall input cost pressures. Factory gate price inflation also slowed in December, with the latest increase in output charges the weakest for seven months. 

Tuesday December 16 2014
US Housing Starts Fell in November
U.S. Census Bureau | Joana Taborda |

Housing starts shrank 1.6 percent in November, following a revised 1.7 percent rise in October, dragged down by a 5.4 percent drop in single-family homes. Building permits fell at a faster 5.2 percent.

Privately-owned housing starts in November were at a seasonally adjusted annual rate of 1,028,000. This is 1.6 percent below the revised October estimate of 1,045,000 and is 7.0 percent below the November 2013 rate of 1,105,000.

Single-family housing starts in November were at a rate of 677,000; this is 5.4 percent below the revised October figure of 716,000. The November rate for units in buildings with five units or more was 340,000.

Privately-owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 1,035,000. This is 5.2 percent below the revised October rate of 1,092,000 and is 0.2 percent below the November 2013 estimate of 1,037,000.

Single-family authorizations in November were at a rate of 639,000; this is 1.2 percent below the revised October figure of 647,000. Authorizations of units in buildings with five units or more were at a rate of 367,000 in November.

Monday December 15 2014
US Industrial Production Surges
Federal Reserve | Joana Taborda |

Industrial output in the United States rose 1.3 percent in November, following a revised 0.1 percent increase in October. It is the highest growth in more than four years supported by gains in manufacturing and utilities’ production.

The rise in factory output was well above its average monthly pace of 0.3 percent over the previous five months. In November, the output of utilities jumped 5.1 percent, as weather that was colder than usual for the month boosted demand for heating. The index for mining decreased 0.1 percent. 

Manufacturing output rose 1.1 percent in November, and the rates of change for prior months are stronger than reported previously. Factory output is now estimated to have been above its late-2007 pre-recession peak in both October and November. In November, the indexes for both durables and nondurables increased more than 1 percent, and the output of every major industry group increased or remained unchanged. Among durable goods industries, the output of motor vehicles and parts jumped 5.1 percent as a result of an increase of 900,000 units at an annual rate in total motor vehicle assemblies. Miscellaneous manufacturing, wood products, and machinery each recorded gains exceeding 1 percent. Among nondurable goods industries, output advances of more than 2 percent were registered by petroleum and coal products and by apparel and leather. The indexes for food, beverage, and tobacco products and for plastics and rubber products both increased 1.4 percent.

The capacity utilization rate for manufacturing moved up 0.8 percentage point in November to 78.4 percent, a rate 0.3 percentage point below its long-run average. The operating rates for nondurable goods and durables goods increased, and the rate for other manufacturing (non-NAICS) remained unchanged. The utilization rate for mines fell 0.8 percentage point to 87.9 percent, while the rate for utilities increased 3.9 percentage points to 82.4 percent. 

At 106.7 percent of its 2007 average, total industrial production in November was 5.2 percent above its year-earlier level. Capacity utilization for the industrial sector increased 0.8 percentage point in November to 80.1 percent, a rate equal to its long-run (1972–2013) average.

Friday December 12 2014
US Consumer Sentiment Up to 8-Year High
The Thomson Reuters/University of Michigan | Joana Taborda |

The Thomson Reuters/University of Michigan's preliminary reading on the overall index of consumer sentiment came in at 93.8 in December. It is the highest figure since January of 2007 as lower gasoline prices improved consumer current and future expectations.

The barometer of current economic conditions increased to 105.7 from a final 102.7 in November. 

The gauge of consumer expectations came in at a preliminary 86.1 from a final 79.9 in November. 

The one-year inflation expectations increased to 2.9 percent from 2.8 percent in November. The five-to-ten-year inflation outlook was recorded at 2.9 percent, up from 2.6 percent in the previous month. 

Thursday December 11 2014
US Retail Sales Beat Expectations
US Commerce Department | Joana Taborda |

Retail sales increased 0.7 percent in November, following a revised 0.5 percent rise in the previous month. It is the highest gain since March, as the holiday shopping boosted food, auto and clothing sales.

Sales of motor vehicles and parts recorded the highest increase (1.7 percent), followed by building materials (1.4 percent) and clothing (1.2 percent). Receipts at online stores rose 1 percent; electronics and appliances grew 0.9 percent; health and personal care went up 0.8 percent and sales in grocery stores rose 0.3 percent. In contrast, sales in gasoline stations shrank 0.8 percent. 

Core sales, which strip out automobiles, gasoline, building materials and food services rose 0.6 percent in November. Excluding automobiles, sales increased 0.5 percent.

Year-on-year retail sales rose 5.1 percent. Total sales for the September through November 2014 period were up 4.7 percent from the same period a year ago.

Thursday December 11 2014
US Jobless Claims Decrease Slightly
US Department of Labor |

The number of Americans filing new claims for unemployment benefits fell to 294 thousand for the week ended December 6th, pointing to a strengthening labor market.

The four-week moving average ticked up by 250 to 299,250, holding below the 300,000 mark for the 13th straight month.  

The claims report showed the number of people still receiving benefits after an initial week of aid increased by 142,000 to 2.51 million in the week ended November 29th. 

Job gains in November were the largest in nearly three years and marked the 10th straight month of increases above 200,000, the longest such stretch since 1994.  

Wednesday December 10 2014
US Budget Deficit Narrows More Than Expected in November
Treasury Department | Joana Taborda |

The United States budget deficit declined by 58 percent to $56.8 billion in November of 2014 as compared to a $182.5 billion gap a year earlier as spending fell and receipts increased.

In November, receipts totaled $191.4 billion, up 4.8 percent from the same period a year ago while outlays totaled $248.3 billion, down 21.8 percent.

The budget results were affected by differences in the calendar as some payments went out in October this year rather than November.