The Federal Reserve moved to lower short-term interest rates last week. Here are the five things we learned from U.S. economic data released during the week ending November 8.
The Fed cuts its short-term interest rate target again. The statement released this past Thursday following the Federal Open Market Committee (FOMC) meeting notes the economy was expanding “at a solid pace,” “labor market conditions have generally eased,” and inflation, while “somewhat elevated,” was moving towards the Fed’s target. Further, they see “the risks to achieving its employment and inflation goals [to be] roughly in balance.” As a result, the FOMC unanimously voted to cut the fed funds target rate by a quarter point to a range of 4.50 percent to 4.75 percent. The FOMC will meet one final time this year in December.
Factory orders declined in September. The Census Bureau estimates new orders for manufactured decreased 0.5 percent to a seasonally adjusted $584.2 billion. Orders over the first nine months of this year—$5.244 trillion—mirror orders of 2023’s comparable months. Net of transportation goods, orders were up 0.1 percent for the month and 1.3 percent thus far this year. Orders for durable and nondurable goods declined 0.7 percent and 0.2 percent, respectively. Shipment declined 0.2 percent to $586.9 billion. Unfilled orders grew 0.2 percent to $1.391 trillion, while inventories contracted 0.2 percent to $858.1 billion.
Service sector activity accelerated in October. The Institute for Supply Management’s Services PMI added 1.1 points to 56.0. This was the fourth consecutive month (and the eighth time thus far in 2024) in which the Services PMI was above 50.0, indicative of an expanding service sector. Falling were indices tracking business activity/production, new orders, and inventories. The employment index increased. Fourteen industries reported growth, including retail, information, and transportation/warehousing. The press release noted that comments included “[c]oncerns over political uncertainty.”
The trade deficit swelled in September. Exports slowed 1.2 percent to a seasonally adjusted $267.9 billion and imports rose 3.0 percent to $352.3 billion. The resulting trade deficit of -$84.4 billion leaves the Census Bureau and Bureau of Economic Analysis measure up 19.2 percent from August. The year-to-date trade deficit of -$660.5 billion was up 11.8 percent from the comparable 2023 months. The goods deficit expanded by $14.2 billion to -$109.0 billion, while the services surplus added $0.6 billion to +$24.6 billion. The former reflected decreased exports of civilian aircraft, pharmaceutical preparations, and crude oils, along with increased imports of pharmaceutical preparations, computers, semiconductors, automobiles, and nonmonetary gold. The U.S. had its largest services trade deficits with China, the European Union, Mexico, and Vietnam.
Consumer sentiment brightened days before the election. The preliminary November 2024 reading of the University of Michigan Index of Consumer Sentiment at a seasonally adjusted 73.0, has the index up 2.5 points for the month and 19.1 percent from a year earlier. The current conditions index slipped a half point to 64.4 (-5.7 percent versus November 2023), while the expectations index jumped 4.4 points to 78.5 (+38.2 percent versus November 2023). The data reflects interviews completed by last Monday (i.e., before the election). One-year inflation expectations were at +2.6 percent (down 1/10th of a percentage point from October), while long-term inflation expectations inched up 1/10th of a percentage point to +3.1 percent.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending November 2, 2024, First-Time Claims, seasonally adjusted): 221,000, +3,000 vs. the previous week, -7,000 vs. the same week a year earlier). 4-week moving average: 227,250 (+7.3% vs. the same week a year earlier).
- Vehicle Sales (October 2024, Auto and Light Truck Sales, seasonally adjusted annualized rate): 16.038 million (+1.7% vs. September 2024; +4.5% vs. October 2023).
- Productivity (2024Q3-preliminary, Nonfarm Business Productivity, seasonally adjusted annualized rate): +2.2% vs. 2024Q2; +2.0% vs. 2023Q3.
- Wholesale Trade (September 2024, Wholesalers’ Inventories, seasonally adjusted): $903.7 billion (-0.2% vs. August 2024; +0.3% vs. September 2023).
- Consumer Credit (September 2024, Outstanding Consumer Credit Balances—Non-Real Estate, seasonally adjusted): $5.103 trillion (+$6.0 billion vs. August 2024; +2.2% vs. September 2023).
- Bankruptcy Filings (12 Month Period Ending September 30, 2024, Business and Non-Business Filings): 504,112 (+16.2% vs. 12-month period ending September 30, 2023).
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What We Learned About the U.S. Economy Last Week 