The ISM Manufacturing index rose by 2 points to 59, above estimates of 57, according to the Institute for Supply Management. Any number above 50 indicates expansion. With an expanded rate of manufacturing, the U.S. is seeing manufacturing expand at the fastest rate in three years. The index also saw a high for new orders that indicate demand has reached its strongest level since 2004.
Jobless claims fell by 14,000 to 298,000 in the week ending August 16th, according to the Department of Labor. This was lower than most analysts had expected, spurring speculation that the Federal Reserve may tighten its monetary policy faster than predicted. The previous week’s claims were revised up by 1,000.
The 4-week moving average for claims rose from 296,000 for the four weeks prior to August 9th to 300,750 for the four weeks prior to August 16th, or a change of 1.6%. However, the 4-week moving average is down nearly 10% from a year ago.
The United States GDP rose at a 4.2% annual rate in the second quarter, according to a new estimate by the Commerce Department’s Bureau of Economic Analysis.
The U.S. Federal budget deficit is declining at a faster pace than previously projected, according to a new report by the Congressional Budget Office.
Due to cost-cutting after the so-called “fiscal cliff” in January 2013, in which Federal budget cuts automatically went into effect, the U.S. government’s deficit has shrunk to $506 billion on an annual run rate in 2014. According to the CBO, this shortfall is 25% smaller than it was in 2013, and will account for 2.9% of the nation’s GDP.
Equities broadly rallied for the week as cooling tensions in Ukraine, stable unemployment rates in the U.S., and emerging markets saw growing demand for debt. Investors have eschewed the risk aversion that saw U.S. stocks fall in the first half of August, while commodity prices sought a bottom and fears of deflation were replaced with confidence in a global return to consistent growth.
The Bureau of Labor Statistics reported stable regional and state unemployment rates in July that indicated a growing divergence between states and counties. The unemployment rate remained at 6.2% across states, down 110 basis points from a year ago.
Less Americans are applying for mortgages and retail sales growth is decelerating amidst sluggish demand from consumers.
The Commerce Department reported retail sales excluding cars rose 0.1% in July, down from 0.2% in June. In a separate report, the Labor Department saw inflation-adjusted average weekly earnings fall by 0.2% in the 12 months to June 2014, the biggest decline since October 2012.
Houses selling for less than $200,000 are becoming harder to find in U.S. markets as home prices continue to rise at a strong but slowing pace in 2014.
Following Britain’s lead, the United States economy has begun to recover after a severely disappointing start for this year. As freezing weather took its toll within the initial months of 2014, high taxes, job killing regulations, Obamacare, and so on, the GDP (figure used to determine the complete size of the economy) fell by a rate of approximately 2.9%. However, the 2nd quarter of the year displayed some growth in the GDP, leading some analysts to believe that the world’s largest economy could not be so devastated to its own people.
Initial jobless claims fell sharply this week while continuing claims were also below expectations.
In total, initial unemployment claims fell to 289,000 from the prior week, well below economists’ expectations of 304,000. This brings unemployment claims to their lowest level since 2006. Jobless claims’ four week average fell to 293,500, again the lowest figure since 2006.
