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01/20/2016
Market Update

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This week, U.S. oil dropped below $30 per barrel for the first time in 12 years as export prices for December were reported at all time lows. The latest industrial production figures showed deteriorating conditions in the U.S., U.K. and eurozone.
This Week
  • This week, U.S. oil dropped below $30 per barrel for the first time in 12 years as export prices for December were reported at all time lows. The latest industrial production figures showed deteriorating conditions in the U.S., U.K. and eurozone.
  • Industrial production contracted for the third straight month in December, with a sharper-than-expected drop due to weakness in utilities and mining. Manufacturing also softened, as motor vehicle production narrowed for the second consecutive month.
  • Retail sales slowed by 0.1% in December. General merchandise and apparel detracted most, while electronics and appliances also slackened. December’s outturn is likely to lower expectations for fourth-quarter economic growth.
  • U.S. import and export prices contracted again in December, roughly in line with each other. While petroleum prices continued to weigh on imports, capital goods imports recorded their steepest year-over-year decline in 14 years. Export prices reached their lowest year-over-year reading since the series was introduced in 1989.
  • Producer prices fell by 0.2% in December ― nearly reversing November’s advance ― and by 1.0% in the year over year. While energy prices continued to slide, trade service prices (which appreciated in recent months) recorded zero growth.
  • The Job Openings and Labor Turnover Survey for November indicated a rise in job openings from 5.34 to 5.43 million in November alongside 5.2 million hires. However, the unchanged 2% quits rate suggests limited mobility for the workforce.
  • U.S. jobless claims climbed to a six-month peak, rising by 7,000 to 284,000 for the week ending January 9, while the four-week moving average also widened. Continuing claims grew by 29,000 to 2.26 million for the week ending January 2.
  • Preliminary data for January indicated that consumer sentiment improved for the fourth consecutive month, according to the University of Michigan. Sentiment toward current economic conditions rose, and price-adjusted income expectations reached a nine-year peak. However, optimism now appears dependent on low consumer prices.
  • U.K. industrial production slackened against expectations for the third straight month in November. Utilities and mining detracted alongside widespread slowing in manufacturing subsectors, with pharmaceuticals declining the most.
  • Eurozone industrial production was negative in November, falling substantially short of expectations, yet remained positive in the year over year. Intermediates and non-durables gained, while energy and both capital and durable goods deteriorated. The quarter-to-date outturn suggests little contribution to growth.
  • China’s trade surplus was greater than projected in December for the year over year. Imports deceleration moderated, while exports increased for the first time since June. This may indicate that the weakened renminbi is providing an economic tailwind.

 

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