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1. Trade Deficit Narrows by Most in Five Years
2. Survey: Consumer Sentiment Falls
3. Wholesale Inventories Creep Up; Sales Tumble
4. Jobless Claims Decline
1. Trade Deficit Narrows by Most in Five Years
The nation's trade deficit backed off its record highs in September aided by
falling oil prices and falling demand for imports such as telecommunications
equipment, autos, and computers.
The U.S. trade deficit fell 6.8 percent to $64.3 billion in September, down from
the all-time high of $69 billion in August. That's the biggest one-month decline
since February 2001, according to the Census Bureau.
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Falling oil prices were the main factor in narrowing the trade deficit in
September. The price of oil imports fell $3.1 billion or 10.5 percent to $26.3
billion as oil prices averaged $62.52 per barrel, a drop of $3.60 per barrel.
Total imports fell 2.1 percent to $187.5 billion, and U.S. exports rose 0.5
percent to an all-time high of $123.2 billion. U.S. sales of commercial
aircraft, railway equipment, and industrial engines in particular boosted
exports, says The Associated Press.
The nation's deficit with China continued to mount despite the overall
improvement. Yesterday, MoneyNews told you that China's trade surplus reached
another record. That's mostly thanks to the U.S., which imported a record $27.6
billion worth of goods from China.
The U.S. deficit with China reached a record $23 billion in September as the
country imported televisions, cell phones, and toys in preparation for the
holidays.
The U.S. is on pace to rack up a record $221.7 billion IOU slip with China by
the end of the year. Last year's deficit of $202 billion had been the largest
deficit ever with a single country, says the AP.
The deficit is also on pace to set a record for the fifth year in a row. The
deficit's annual rate is $781.6 billion, based on the first nine months of the
year. Last year's deficit was $716.7 billion, an all-time high thus far.
"Large and persistent trade deficits, as a share of GDP, are unsustainable over
the long term. In the long run, the trade deficit would affect the dollar and
interest rates," says Moody's Economy.com.
"Foreign investment inflows from petrodollars and Asian dollar buying to keep
their exports cheap have, so far, supported the massive U.S. trade deficit
without any repercussions," Economy.com explains.
If those conditions change, though, the U.S. will be up a very swift creek
without a paddle.
Editor's Note:
2. Survey: Consumer Sentiment Falls
U.S. consumer sentiment weakened slightly in early November, a report showed
Thursday, as consumers scaled back their view of their current and future
financial conditions.
The declines in the latest survey's readings were small but just enough to cast
worries on how consumers would spend during the holiday shopping season.
"This is in-line with what we are looking at with the retailers and it confirms
the weakness on the retail side," said Paul Nolte, director of investments at
Hinsdale Associates in Hinsdale, Ill.
The University of Michigan's preliminary reading on consumer sentiment in
November was 92.3, down from October's reading of 93.6, said sources who saw the
subscription-only report.
The median forecast of Wall Street economists polled by Reuters was for a
reading of 93.6.
Falling gasoline prices have brightened consumer mood but not enough to elevate
them again in early November, economists said.
Retail gasoline prices averaged $2.23 a gallon last week, 3.5 cents lower than a
week earlier and 50 cents below a year ago, the Energy Information
Administration said earlier this week.
The University of Michigan survey's index of current conditions slipped to 106.5
in early November from 107.3 in October, while consumer expectations dipped to
83.2 from 84.8 in October.
Consumer spending accounts for about two-thirds of U.S. economic activity, but
in recent years confidence measures have been a weak guide to actual spending.
Consumers' expectations for increased inflation fell in early November the
report said, according to the sources.
The University of Michigan's preliminary November reading on one-year U.S.
inflation expectations was 3.0 percent, down from 3.1 percent in October.
Median expectations for inflation over a five-year horizon fell to 3.0 percent
from 3.1 percent in October.
© 2006 Reuters.
Editor's Note:
3. Wholesale Inventories Creep Up; Sales Tumble
Inventories at U.S. wholesalers rose by a larger-than-expected 0.8 percent in
September, while sales fell for the first time in nearly a year, the government
said on Thursday.
Analysts polled by Reuters projected wholesale inventories — unsold stocks held
by U.S. businesses or companies for resale to retailers — to rise 0.5 percent
after a 1.2 percent August gain.
Wholesale inventories were led by gains in unsold stocks of durable goods, which
rose by 1.5 percent during the month. Inventories of nondurable goods, such as
food and apparel, fell 0.4 percent, the Commerce Department said.
Inventories of automobiles jumped 1.9 percent to $37.34 billion in September
after a 0.9 percent August decline.
Overall wholesale sales fell by 1.2 percent in September, its first decline
since November 2005 and its largest since April 2003. Sales were up 0.7 percent
in August.
The inventory-to-sales ratio, a gauge of how long it would take to deplete
existing stocks at the current sales pace, rose to 1.18 months' worth in
September. That was after hitting 1.16 months' worth in August and was the
highest level in more than a year.
Overall sales were dragged down by a 7.1 percent drop in petroleum during
September after a 2.8 percent decline in August. However, the value of petroleum
inventories rose 2.4 percent to $10.44 billion.
© 2006 Reuters.
Editor's Note:
4. Jobless Claims Decline
The number of U.S. workers applying for jobless benefits declined by a
steeper-than-expected 20,000 last week to 308,000, government data showed on
Thursday, a level indicating still-healthy employment conditions.
The latest figures from the Labor Department cover the week ending Nov. 4 and
compare with Wall Street forecasts for claims of 315,000, versus a revised
328,000 the previous week. This was initially reported as 327,000 applications
for aid.
A Labor Department official said there were no special factors impacting the
data from last week.
The four-week moving average — seen as a more representative gauge of underlying
employment trends — inched down to 311,250 from 311,500 the week before.
The number of people who remained on the benefits rolls after drawing an initial
week of aid increased by 43,000 to 2.448 million in the week ended Oct. 28, the
latest week for which data are available. This compared with a consensus
forecast of 2.43 million claims.
Jobs data are under even closer-than-usual scrutiny after a sharp fall in the
unemployment level in October to 4.4 percent, from 4.6 percent the previous
month, tightening labor market conditions. Economists took this as a sign of
potential wage inflation pressures that might worry the U.S. Federal Reserve.
© 2006 Reuters.
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