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02/05/2015
Market Update

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The U.S. economy continued its gradual expansion amid growing consumer confidence and falling jobless claims. Overseas, the U.K. reported moderating economic growth, and consumer prices in the eurozone registered a historic low.
This Week
  • The U.S. economy continued its gradual expansion amid growing consumer confidence and falling jobless claims. Overseas, the U.K. reported moderating economic growth, and consumer prices in the eurozone registered a historic low.
  • The U.S. economy grew by 2.6% in the fourth quarter, which was below projections, compared to 5% in the third quarter. Personal consumption, inventory increases and exports contributed, while imports and soft consumer prices detracted.
  • The University of Michigan reported greater consumer confidence in January for the sixth consecutive month, It also indicated the highest reading and the greatest level of confidence in current conditions since 2004.
  • U.S. home prices (seasonally adjusted) remained steady in November, matching October’s revised 0.7% increase, according to the Case-Shiller Home Price Index. A strong monthly sales trend during the period could be an indication of future growth.
  • Sales of new U.S. homes surged by 11.6% in December, exceeding expectations and offsetting November’s decline. Conversely, pending home sales experienced an unforeseen drop in December, reversing recent strides.
  • U.S. initial jobless claims plummeted by 43,000 to 265,000—the lowest level since 2000—for the week of January 24; however, seasonal volatility may be a factor. Continuing claims, reflecting delayed data, shrank significantly for the week of January 17.
  • Employment-cost pressures generally held steady during the fourth quarter, rising 0.6% after a 0.7% increase in the third quarter. The year-over-year change remained at 2.2%.
  • Durable goods orders fell in December for the second straight month, disappointing expectations. Sector performance was mostly negative, excluding automobile production; however, a sharp plunge in transportation (which includes aircraft orders) detracted the most.
  • U.K. economic growth deteriorated in the fourth quarter to 0.5%, coming in below projections. However, the Office of National Statistics reported a 2.7% growth rate for 2014, the fastest pace since 2007.
  • Consumer prices in the eurozone contracted in January, with the largest annual decline since 2009. Historically volatile sectors (food, tobacco, energy, alcohol) detracted slightly, indicating weak prices in all sectors.
  • Consumer prices in Japan (excluding food and energy) were flat in December, rising from -0.2% in November. Excluding sales tax, the 0.5% annualized growth rate is the slowest pace since 2013.

 

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