Left Menu
Development News Edition

WRAPUP 3-U.S. data point to moderate economic growth, tightening jobs market


WRAPUP 3-U.S. data point to moderate economic growth, tightening jobs market

U.S. retail sales increased for a third straight month in December, with households buying a range of goods even as they cut back on purchases of motor vehicles, suggesting the economy maintained a moderate growth pace at the end of 2019.

Other data on Thursday showed the number of Americans filing claims for unemployment benefits dropped for a fifth straight week last week, indicating the labor market remained strong despite a recent slowdown in job growth. That should help sustain consumer spending and probably keep the longest economic expansion on record, now in its 11th year, on track. The Federal Reserve on Wednesday described the economy as having continued to expand modestly in the final six weeks of 2019. The U.S. central bank has signaled that it could keep interest rates unchanged at least through this year after reducing borrowing costs three times in 2019.

"There's more fuel in the tank of this economic expansion," said Chris Rupkey, chief economist at MUFG in New York. The Commerce Department said retail sales increased 0.3% last month. Data for November was revised up to show retail sales gaining 0.3% instead of rising 0.2% as previously reported. Economists polled by Reuters had forecast retail sales would gain 0.3% in December. Compared to December of last year, retail sales accelerated 5.8%. Sales increased 3.6% in 2019.

Excluding automobiles, gasoline, building materials and food services, retail sales rebounded 0.5% last month after falling by a downwardly revised 0.1% in November. The so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously reported to have edged up 0.1% in November. Core retail sales for October were also revised lower.

Overall sales rose in December despite retailers such as Target Corp, Kohl's, J.C. Penney and Macy's reporting a decline in sales for the holiday period as foot traffic in malls dropped. Though a report last week showed a slowdown in job growth in December and the increase in the annual wage gain retreating to below 3.0%, the labor market remains on solid footing. In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 204,000 for the week ended Jan. 11.

Economists had forecast claims would rise to 216,000 in the latest week. The dollar was little changed against a basket of currencies, while U.S. Treasury prices fell. Stocks on Wall Street were trading higher, with the S&P 500 index crossing the 3,300 threshold for the first time, as upbeat earnings from Morgan Stanley and a tech rally added to optimism from an initial U.S.-China trade deal.

SOME RED FLAGS While claims are trending lower, there are some worrying signs emerging. The claims data showed layoffs in manufacturing, transportation and warehousing, construction, educational services and accommodation and food services industries in late 2019 and early 2020.

Some of the job losses in manufacturing, which were spread across at least eight states, could be related to the 18-month trade war between the United States and China, which has hurt business confidence and undercut capital expenditure. U.S. President Donald Trump and Chinese Vice Premier Liu He signed a "Phase 1" trade deal on Wednesday, a first step toward defusing the trade war. But with U.S. duties remaining in effect on $360 billion of Chinese imports, about two thirds of the total, economists do not expect the initial deal to provide a boost to manufacturing, which is in recession.

A third report on Thursday from the Philadelphia Fed showed factory activity in the mid-Atlantic region accelerated in January, with manufacturers reporting receiving more orders. But a measure of unfilled orders at factories in the region that covers eastern Pennsylvania, southern New Jersey and Delaware contracted and manufacturers cut hours for employees. Even as trade tensions have eased, a pall remains over manufacturing, which accounts for 11% of the economy. Boeing has suspended production of its fast-selling 737 MAX jetliner starting this month and ripple effects are already being felt, with a major supplier announcing layoffs last week.

"Manufacturing will grow at a subdued pace in 2020, constrained by slower external and domestic growth as well as ongoing uncertainty on the trade policy front despite the Phase-one trade deal," said Oren Klachkin, lead U.S. economist at Oxford Economics in New York. For now, consumers appear set to continue driving the economy, also thanks to house prices and a bullish stock market.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 3.2% annualized rate in the third quarter. Given the downward revisions to October and November core retail sales, growth in consumer spending is expected to have slowed to around or below a 2.5% rate in the fourth quarter. Growth estimates for the fourth quarter are as high as a 2.5% rate, in part because of a drop in imports, which compressed the trade deficit. The economy expanded at a 2.1% pace in the July-September period.

In December, auto sales fell 1.3%, the biggest drop since last January, after increasing 1.5% in November. Higher gasoline prices lifted receipts at service stations, which jumped 2.8%. Online and mail-order retail sales rose 0.2% after being unchanged in November. Sales at electronics and appliance stores rebounded 0.6% in December. Receipts at building material stores surged 1.4% and sales at clothing stores accelerated 1.6%. Spending at furniture stores edged up 0.1%. Americans also spent more at restaurants and bars, with sales rising 0.2% last month. Spending at hobby, musical instrument and book stores rebounded 0.9%.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

Download The Devdiscourse News App for Latest News.


TRENDING

OPINION/BLOG/INTERVIEW

WEF2020: Trump seems politically correct in pulling out from Paris Agreement

If the survey of the World Economic Forum WEF is believed, Trump seems to enjoy the confidence of his people in flaying climate intuitions and climate activists. His preference for economic development over environmental protection not only...

From home to healthcare, here are Robotic innovations transforming lives

Lovot is equipped with more than 50 sensors such as thermography, microphone array, obstacle detection, and touch sensor to generate motion and emotions in real-time....

Translating words to deeds: Achieving gender parity in access to financial resources

... ...

SDG13: How you can reduce global warming by changing your food habits

The mega narratives of various international organizations give the impression that fighting global warming is only a job of government agencies. However, the European Investment Bank EIB has designed a questionnaire which besides making th...

Videos

Latest News

UPDATE 7-Weinstein lawyer to jury: texts will show alleged attacks were consensual sex

Harvey Weinsteins lawyer told a Manhattan jury on Wednesday his client was not a seasoned sexual predator, as prosecutors claimed, and said the defense had emails and texts that would show the former Hollywood producer and his accusers enga...

UPDATE 1-Canadian prosecutors seek to fine Volkswagen C$196.5 mln for diesel emissions

Prosecutors in Canada on Wednesday proposed a 196.5 million CAD 149.5 million fine against Volkswagen AG after the company pleaded guilty to dozens of counts of diesel emissions violations, a company spokesman confirmed on Wednesday. Volksw...

UPDATE 1-Soccer-Griezmann double ends Ibiza party in Copa del Rey

Barcelonas Antoine Griezmann struck a late double to help them come from behind to beat Spanish third-tier side UD Ibiza 2-1 and avoid an embarrassing Copa del Rey last-32 exit on Wednesday.Javi Perez put Ibiza ahead after nine minutes and ...

Hairy situation: Scientists explain how stress-related graying occurs

Marie Antoinettes hair turned white overnight, according to folklore, before she was executed by guillotine in 1793 during the French Revolution. The ill-fated queen embodied an extreme example of the phenomenon of stress-induced graying of...

Give Feedback