Publications

U.S. Economic Indicators

The NFIB Small Business Optimism Index edged down 0.4 point to 104.4 in December but remains near all-time highs, as four of the components increased and six decreased. Expected real sales growth and expected business conditions both worsened. NFIB Report

U.S. News

The Job Openings and Labor Turnover Survey (“JOLTS”), a closely-watched measure of labor market health, indicated there were 6.9 million job openings at the end of November, a slight decrease from October.  Hires edged down to 5.7 million while the quits rate remained at 2.3%.  BLS Report

The Wall Street Journal reports that new signs of a weakening German economy are raising fears that last year’s slowdown could spill into 2019, increasing the challenges for the European and American economies. Falling industrial production and business confidence in Germany also caused French, Italian, and Spanish manufacturers to lower their expectations. WSJ

Lingling Wei reports for the Wall Street Journal that the U.S. and China opened talks Monday to resolve the trade fight threatening the global economy. Trade officials from Washington are attempting to get China to agree to more Chinese purchases of U.S. goods and services, increased access to Chinese markets for the U.S., and more protections of U.S. intellectual property. WSJ

U.S. Economic Indicators

The ISM Non-Manufacturing Index dropped 3.1 percentage points to 57.6 in December. The New Orders Index edged up 0.2 percentage point to 62.7 while the Employment Index fell 2.1 percentage points to 56.3. ISM Report

U.S. News

The Wall Street Journal reports that China’s economy is slowing faster than expected as U.S. and Chinese officials begin trade negotiations. In recent months, senior Chinese officials have sought to downplay the impact of the trade war on the economy, stating the conflict is hurting only the nation’s stock indexes. WSJ

According to the Financial Times, investors began the year unprepared for the renewed volatility resulting from the Federal Reserve tightening credit and shrinking its balance sheet. The author states that the central issues are the wholesale derating of equity and credit risk assets in addition to a fall in Treasury yields as investors seek liquidity. FT

The Wall Street Journal reports that mortgage rates have fallen to their lowest levels in eight months, offering a potential boost to the housing market. The decline may give consumers another opportunity to receive a lower rate on loans to purchase or refinance their homes. WSJ

U.S. Economic Indicators

The U.S. economy added 312,000 jobs in December, far above consensus. The unemployment rate rose to 3.9%, the labor force participation rate increased to 63.1%, and average hourly earnings annual growth edged up to 3.2%. BLS Report

U.S. News

The Financial Times reports that US and China officials will meet Monday for the first formal trade negotiations since the early-December trade truce. The talks are expected to center on intellectual property protection and Chinese industrial policy, which the US believes favors domestic Chinese companies over foreign firms. FT

Alexandra Stevenson of the New York Times reports that the Chinese government is poised to cut the reserve requirement ratio to inject more than $200 billion into the Chinese economy. The move comes as the Chinese economy is facing weakening factory output, wavering consumer confidence, and an ongoing trade battle with the United States. NYT

According to the Wall Street Journal, more first-time homebuyers are turning to their parents for help with mortgage down payments. Data show that over 26% of mortgage borrowers who used loans insured by the Federal Housing Administration received assistance from a relative in making the down payment, highlighting the ongoing affordability issues affecting first-time homebuyers. WSJ

U.S. Economic Indicators

The ADP Employment Report shows that private-sector employment increased by 271,000 jobs in December, above expectations of 175,000.  The services sector added 224,000 jobs and the goods-producing sector added 47,000 jobs. ADP Report

Initial jobless claims rose 10,000 to 231,000 last week. The four-week moving average decreased 500 to 218,750. DOL Report

The ISM Manufacturing Index decreased 5.2 percentage points to 54.1 in December.  The Employment Index eased 2.2 percentage points to 56.2 while the New Orders Index decreased 11 percentage points to 51.1.  ISM Report

U.S. News

The Wall Street Journal reports that investors increasingly believe the Federal Reserve will decrease or hold interest rates steady this year, a sign of waning confidence that the U.S. economic expansion will continue at 2018’s pace. Fed officials expect U.S. growth to moderate this year due to slower growth abroad, fading government stimulus measures, and the effects of the Fed’s own balance sheet reduction. WSJ

According to the Wall Street Journal, Chinese consumers, normally a reliable growth driver, are losing confidence in the Chinese economy, deepening an economic pullback felt by global markets. Chinese consumer spending has been dented by a slowing domestic economy, the U.S. trade fight, and rising housing costs. WSJ

U.S. News

According the Wall Street Journal, steel importers are winning most of their requests for tariff exclusions for products not found in the U.S., but manufacturers and importers say the process has inconsistencies and frequent procedural changes. As of December 17, the Commerce Department granted about 75% of 19,000 requests to exclude products from tariffs on foreign steel, covering about 16% of the finished foreign steel entering the U.S. in 2018. WSJ

Ryan Dezember from the Wall Street Journal reports that lumber futures have lost nearly half their value since hitting their peak on May 17, 2018. Among the causes for lumber’s collapse are oversupplied lumber yards and a cooling housing market due to rising interest rates and surging home prices. WSJ

The Financial Times reports that uncertainty will depress UK business investment and consumer spending in 2019, easing long-term growth even if Britain avoids a disorderly Brexit, according to a poll of economists. According to the poll, the best the UK can expect over the year is a continuation of modest 1.5% growth. FT

Emre Peker from the Wall Street Journal reports that the EU faces headwinds to fulfilling its promise to lower its trade surplus with the United States. The EU is negotiating with the U.S. to cut duties and red tape, and EU officials hope market forces will boost U.S. exports of soybeans and liquified natural to provide breathing room as talks continue. WSJ