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01/17/2018
Market Update

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Retail sales showed a solid 0.4% gain in December, supported by the holiday season and high consumer confidence in the economy that translated into a willingness to spend.
This Week

  • Retail sales showed a solid 0.4% gain in December, supported by the holiday season and high consumer confidence in the economy that translated into a willingness to spend.
  • Job openings (a measure of labor demand) remained at a historically strong level in November despite falling from 5.93 to 5.88 million, according to the Department of Labor’s Job Openings and Labor Turnover Survey. Hires slowed by 104,000 to 5.49 million and continued to lag the number of available jobs. Analysts suggested that the survey’s low quit-rate reading indicated there could be pressure on employers to increase wages in the near future.
  • Initial jobless claims grew by 11,000 to 261,000 in the week ending January 6, expending for the fourth consecutive week. The more stable four-week moving average rose by 9,000 to 250,750. Continuing claims fell by 35,000 to a 44-year low of 1.87 million in the week ending December 30.
  • Import prices edged 0.1% higher in December, as elevated energy costs were countered by a drop in non-fuel prices. Year-over-year growth climbed by 3.0%, as a weak U.S. dollar continued to support underlying inflation. Export prices eased by 0.1% in December, bringing the year-over-year gain to 2.6%.
  • Consumer prices grew by 0.1% in December and by 2.1% year over year; higher housing and medical-care costs offset the effects of declining energy prices. The more-closely-followed core rate (which excludes food and energy) crept up to 1.8%. Producer prices softened by 0.1% for the month, the first decline in more than a year, primarily due to lower trade-service prices.
  • Outstanding consumer credit (which measures non-mortgage debt) increased by 8.8% in November, the fastest pace in more than two years, following a 6.5% expansion in October. Revolving credit reached a one-year high, offering confidence in near-term consumer spending—but also suggesting a possible lack of sustainability as debt burdens increase.
  • Mortgage-purchase applications jumped 5% higher in the week ending January 5 despite a slight rise in mortgage rates, indicating accelerating strength in the housing market. Refinancing activity (which can be sensitive to even small rate changes) surged by 11% in the same period.
  • Industrial production in the Eurozone rallied by 1.0% in November; gains in capital goods, consumer durables and intermediates piloted the overall improvement.
  • Industrial production in the U.K. climbed by 0.4% in November (as anticipated, thanks to mining and quarrying) and slowed in the annual period (by less than expected) to 2.5%. Manufacturing output expanded in the month, primarily within chemicals and rubber and plastic products, but at a slower rate than in October; the sector gained 3.5% year-over-year.
  • Consumer prices in China increased by 1.8% from a year ago in December. Producer prices strengthened by 4.9% in the same period.

 

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