by Calculated Risk on 2/06/2014 08:58:00 AM

The Department of Commerce reported this morning:

[T]otal December exports of $191.3 billion and imports of $230.0 billion resulted in a goods and services deficit of $38.7 billion, up from $34.6 billion in November, revised. December exports were $3.5 billion less than November exports of $194.8 billion. December imports were $0.6 billion more than November imports of $229.4 billion.

The trade deficit was larger than the consensus forecast of $36.0 billion.

The first graph shows the monthly U.S. exports and imports in dollars through December 2013.

Click on graph for larger image.

Imports increased, and exports decreased in December.  

Exports are 15% above the pre-recession peak and up 1% compared to December 2012; imports are just below the pre-recession peak, and up about 1% compared to December 2012. 

The second graph shows the U.S. trade deficit, with and without petroleum, through December.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Oil averaged $91.34 in December, down from $94.69 in November, and down from $95.16 in December 2012.  The petroleum deficit has generally been declining and is the major reason the overall deficit has declined since early 2012.

The trade deficit with China was mostly unchanged at $24.47 billion in December, from $24.53 billion in December 2012.  A majority of the trade deficit is related to China.

Overall it appears exports are picking up a little, and imports (ex-oil) are increasing too.

by Calculated Risk on 2/06/2014 08:33:00 AM

The DOL reports:

In the week ending February 1, the advance figure for seasonally adjusted initial claims was 331,000, a decrease of 20,000 from the previous week's revised figure of 351,000. The 4-week moving average was 334,000, an increase of 250 from the previous week's revised average of 333,750.

The previous week was revised up from 348,000.

The following graph shows the 4-week moving average of weekly claims since January 2000.

Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased slightly to 334,000.

This was the lower than the consensus forecast of 337,000.

by Calculated Risk on 2/05/2014 09:17:00 PM

From Tim Duy: No End To Tapering Yet. Excerpt:

I don't think the Fed believes that the end of asset purchases is impacting global markets because they are convinced that tapering is not tightening. If it is tightening, then why should global markets react? And even if it was tightening, the Fed wouldn't see it as their problem in the first place. ...

Bottom Line: The Fed isn't ready to change course. Recent turbulence is enough to peak their curiosity, not enough to suggest that tapering was premature.

We have seen a few weak economic reports recently such as the December employment report, auto sales in January, and the ISM manufacturing survey for January. But I don't think the recent weakness is a significant concern for the Fed - unless the weakness continues.

Thursday:
• Early: the Trulia Price Rent Monitors for January. This is the index from Trulia that uses asking house prices adjusted both for the mix of homes listed for sale and for seasonal factors.

• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 337 thousand from 348 thousand.

• Also at 8:30 AM, the Trade Balance report for December from the Census Bureau. The consensus is for the U.S. trade deficit to increase to $36.0 billion in December from $34.3 billion in November.

by Calculated Risk on 2/05/2014 04:10:00 PM

From the Federal Reserve: The January 2014 Senior Loan Officer Opinion Survey on Bank Lending Practices

The January 2014 Senior Loan Officer Opinion Survey on Bank Lending Practices addressed changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months. Domestic banks, on balance, reported having eased their lending standards on many types of business and consumer loans and having experienced increases in loan demand, on average, over the past three months.

Regarding loans to businesses, the January survey results generally indicated that, on balance, banks eased their lending policies for commercial and industrial (C&I) loans to firms of all sizes and experienced stronger demand for such loans over the past three months. ...

On net, domestic institutions also reported having eased standards for most types of commercial real estate (CRE) loans and having experienced stronger demand for such loans.
...
Changes in standards and terms on, and demand for, loans to households were mixed. The survey results indicated that a modest fraction of large banks had eased standards on prime residential real estate loans, but a similar fraction of small banks had tightened standards on such loans. A moderate fraction of banks reported, on balance, weaker demand for prime mortgage loans to purchase homes, and a large net fraction reported weaker demand for nontraditional mortgage loans. Demand for home equity lines of credit (HELOCs) was little changed. Respondents indicated that they had eased standards on credit card loans, auto loans, and other consumer loans. emphasis added

Click on graph for larger image.

Here are some charts from the Fed.

This graph shows the change in lending standards and for CRE (commercial real estate) loans.

Banks are loosening their standards for CRE loans, and for various categories of CRE (right half of graph).

The second graph shows the change in demand for CRE loans.

Banks are seeing a pickup in demand for all categories of CRE.

This suggests that we will see an increase in commercial real estate development in the near future.

by Calculated Risk on 2/05/2014 12:54:00 PM

Friday at 8:30 AM ET, the BLS will release the employment report for January. The consensus is for an increase of 181,000 non-farm payroll jobs in January, and for the unemployment rate to be unchanged at 6.7%.

Something to keep in mind - the cold weather clearly impacted the December payroll report, and although the weather was unusually bad in January too, the weather was close to normal during the BLS reference week. Goldman Sachs economist Jan Hatzius wrote last Friday:

Although the month of January as a whole was quite cold, the payroll survey week was actually somewhat warmer than normal ... Even excluding the weather impact, the December employment gain looks to be about 50,000 below the recent trend. In our view, this is implausibly weak relative to other job market measures ... This could result in a bounceback to an above-trend pace even outside the weather impact, although it is also possible that the December reading will be revised up.

Here is a summary of recent data:

• The ADP employment report showed an increase of 175,000 private sector payroll jobs in January. This was close to expectations of 170,000 private sector payroll jobs added. The ADP report hasn't been very useful in predicting the BLS report for any one month. But in general, this suggests employment growth close to expectations.

• The ISM manufacturing employment index decreased in January to 52.3%, from 55.8% in December. A historical correlation between the ISM manufacturing employment index and the BLS employment report for manufacturing, suggests that private sector BLS manufacturing payroll jobs decreased about 7,000 in January. The ADP report indicated a 12,000 decrease for manufacturing jobs in January

The ISM non-manufacturing employment index increased in January to 56.4% from 55.6% in December. A historical correlation between the ISM non-manufacturing index and the BLS employment report for non-manufacturing, suggests that private sector BLS reported payroll jobs for non-manufacturing increased by about 243,000 in January.

Taken together, these surveys suggest around 236,000 jobs added in January - above the consensus forecast.

• Initial weekly unemployment claims averaged close to 333,000 in January. This was down from an average of 359,000 in December.   For the BLS reference week (includes the 12th of the month), initial claims were at 329,000; this was down sharply from 380,000 during the reference week in December.

This suggests fewer layoffs, and possibly more net payroll jobs added than the consensus forecast.

• The final January Reuters / University of Michigan consumer sentiment index decreased to 81.2 from the December reading of 82.5. This is frequently coincident with changes in the labor market, but there are other factors too.

• The small business index from Intuit showed a 10,000 increase in small business employment in January. This is still pretty low.

• Conclusion: As usual the data was mixed. The ADP report was lower in January compared to December, the Intuit small business index showed sluggish hiring, and consumer sentiment decreased slightly in January.

However weekly claims for the reference week were down sharply, and the ISM surveys suggest a larger increase in payrolls.

There is always some randomness to the employment report, but my guess is the report will be over the consensus forecast of 181,000 nonfarm payrolls jobs added in January.   Note: I took the under in December, took the consensus in November (close), and over in October, so I'm probably due to be wrong!!