December Economic Update

December Economic Update

Last Week's Economic News in Review                             December 17, 2013     

Retail sales showed a strong performance last week, with solid receipts rung up during November, but volatility in employment scores tempered the elation some were feeling after the previous week’s string of particularly good news. 

Retail Sales 

Retail sales for November saw their strongest performance in five months, growing by 0.7 percent, higher than the 0.6 percent increase that was forecasted the Census Bureau reported last week. Retail and food service sales for the month hit an estimated $432.3 billion, which was 4.7 percent higher than the same period last year. 

The gain was that much more impressive in that while the figure included the Black Friday shopping surge, it did not include Cyber Monday sales, which occurred on Dec. 2. This points to a likely solid follow up in December. 

In any case, those Black Friday receipts help contribute to a number of strong performances for big-ticket retail categories such as car sales, which grew by 1.8 percent; electronics and appliances, which increased by 1.1 percent; and furniture and home furnishings, which gained 1.2 percent. 

If anything, this increase demonstrated that even at a time when surveys were reporting consumer jitters over the federal shutdown’s possible impact on the economy, they were ultimately confident enough to get out and spend their money, according to Millan Mulraine, senior economist at TD Securities. 

“It should provide more confidence to the Fed that the economic recovery has emerged from the political-induced uncertainties of recent months essentially unscathed and reinforce the expectation for the recent improved performance in the data to be sustained,†Mulraine told the New York Times. 


How can we describe recent short-term employment scores? In a word: volatile, but perhaps that volatility was slightly artificial. After posting a six-year low the week before, last week’s first-time claims for unemployment benefits hit a two-month high. 

Claims for unemployment insurance made by the newly unemployed during the week ending Dec. 7 hit 368,000, a gain of 68,000 claims over the prior week's revised total of 300,000, the Employment and Training Administration reported last week. The Administration also reported that the total number of jobless Americans covered by unemployment benefits for the week ending Nov. 30 was 2,791,000, a gain of 40,000 people over the previous week's total of 2,751,000. 

Most economists were attributing the massive drop that occurred two weeks ago to the Thanksgiving holiday’s influence on jobless reporting. Moreover, first-time claims historically experience a spike the following week, as well, experts added. 

More stable reporting should return in the weeks to come, and in the meantime, employment watchers advised to monitor the four-week moving average for initial jobless claims. In last week’s case that was 328,750 claims for jobless benefits, an increase of 6,000 claims from the preceding week's revised average of 322,750. 

Wholesale Sales and Inventories 

Meanwhile, sales for wholesalers in October increased 1 percent to $435.3 billion, and were 6.4 percent over the same period in October 2012, the Census Bureau reported last week. Key wholesale performers for October were sales of machinery, equipment and supplies, which were up 3.8 percent from September; non-durable goods, which were up 1.8 percent; and petroleum products, which were up 3.6 percent. 

Meanwhile, wholesale inventories for October grew by 1.4 percent over the previous month to hit $514.1 billion. That was almost three times September’s growth in inventories, and marks the largest monthly gain since October 2011. Wholesale inventory gains are typically a positive indicator of economic performance, because it means that businesses expect to sell more to consumers, and certainly the spike in November’s retail sales would confirm that. 

This week, we can expect to see:
  • Monday — Third quarter productivity figures from the Bureau of Labor Statistics; November industrial production and capacity utilization from the Federal Reserve.
  • Tuesday — November consumer price index from the Bureau of Labor Statistics.
  • Wednesday — November housing starts and building permits from the Census Bureau.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; November existing home sales from the National Association of Realtors; November leading economic indicators from The Conference Board.
  • Friday — Third quarter gross domestic product from the Bureau of Economics.
Call Sharon Skinner with Anchor Mortgage @ 864-430-8683

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Dated: December 17th 2013
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