1/7/2015
By Jennifer Coombs

The U.S. trade balance managed to narrow far more than expected during the month of November, again due to lower oil prices, which means that December’s data should be even lower. For November, the U.S. trade deficit narrowed to -$39.0 billion from a revised -$42.2 billion in October, and expectations were for the deficit to narrow to -$41.5 billion. During the month, exports were down 1.0% after gaining 1.6% in October, but imports declined by 2.2% after increasing by 0.7% in October. The large drop in imports was primarily due to a slowdown in petroleum imports, which were down 11.9% while exports in petroleum products increased 5.9%. However, the goods excluding petroleum gap widened to -$45.7 billion from -$45.2 billion in October, and the services surplus was essentially unchanged at $40.4 billion. These numbers should help to boost fourth quarter US gross domestic product (GDP) growth estimates.

After reporting no data for the past two weeks, the Mortgage Bankers’ Association (MBA) noted that application activity fell sharply by 5.0% for purchase applications and 12.0% for refinancing applications. The purchase applications component is a good indicator for the underlying number of home purchases, and it is clearly negative for the year, coming in on a year-over-year basis at -8.0%. Declines in the level of applications continue despite mortgage rates remaining low. The average 30-year rate decreased slightly to 4.01% in the two-week period.

Non-farm job growth came in stronger than expected for the month of December. ADP estimates that private payrolls grew  by 241,000 jobs, significantly higher than the 235,000 consensus estimate and the upwardly revised 227,000 (from 208,000) reading in November. Nevertheless, economists forecast that this Friday’s employment report will read 238,000 new jobs versus the 314,000 added in November. This sets a positive tone for the Bureau of Labor Statistics' monthly employment situation report. 

Jennifer Coombs
Wall Street Strategies

Add a Comment!