This week was a calm one as it started with the Columbus Day yet it also revealed key data such as the countrys trade deficit, jobless claims and prices pressures along with the Feds Beige Book, having all in all optimism and hopes spread regarding the current economical conjuncture rather than fears.
In fact mixed sentiments were spread throughout week on the U.S soil as the superpowers trade gap widened more than forecasted as a result of lower exports due to the current weakened global economy while that that jobless claims of the country fell to a record low.
If truth be told, the U.S trade deficit widened more than forecasted in August to having in fact the deficit extend to 44.2 billion; higher than the market predictions of a 44.0 billion deficit and also worse than a prior revised deficit of 42.5 billion from a deficit of 42.0 billion.
Now this deficit gap came in fact higher than projected since that the countrys exports gloomily fell to its lowest level since February since overall trading lost considerable strength facing a weaker Chinese economy and of course the unending and unsolved debt crisis that is living and breathing on the EU soil.
Yet turning to the superpowers neighbor and major trading partner; Canada, it watched its trade deficit come in actually with a narrowed deficit of 1.32 billion from a prior revised deficit of 2.53 billion from 2.34 billion; better than the market predicted deficit reading of 1.90 billion.
Having in mind that that the Canadian economy major strength is trading and therefore these current toughened and hardened global conditions creates constantly downside pressures on the countrys trading yet the gap between exports and imports narrowed.
As for the labor market of the superpower, it continues on revealing further signs of enhancement although it remains far from a full recovery as confirmed and attested by the Federal Reserve and FOMC members throughout the recent past FOMC decisions meetings and this weeks Feds Beige Book.
No wonder that this week we watched the countrys jobless claims of last week fall to a four-year low as quarter starts; the fewest since February 2008, having the initial jobless claims for October 06 actually come in at 339 thousand; much below the projected reading of 370 thousand.
Now this weeks Feds Beige Book prepared at the Federal Reserve Bank of Minneapolis attested once again across all twelve Federal Reserve Districts that economical growth expansion remains spotted as always but only modestly and at a gradual pace throughout this past period as already stated before by the Fed with the help of the past enhanced housing conditions and auto sales.
In fact the members attested that overall business and manufacturing conditions were “somewhat improved” and that “Consumer spending was generally reported to be flat to up slightly since the last report” yet the present economical conjuncture remains insufficient to heal the labor market fully.
Not forgetting that the last released the Institute for Supply Management; the ISM Manufacturing; a composite diffusion index regarding manufacturing conditions across the United States by targeting roughly supply purchasing managers among 300 industrial firms across the 50 states, rose cheerfully above a reading of 50 to 51.5 from 49.6; above the market projections of 49.7.
While that ISM services of September; a composite diffusion index regarding the services sector conditions across the United States, which was highly forecasted to come out at around 53.4 came out cheerfully instead at 55.1 from a prior reading of 53.7 since that orders continue on picking up and therefore continue on expanding upwards gradually.
Moreover the Fed members declared that "automobile sales generally remained strong" to accordingly witness the strongest demand throughout this sector; auto and steel manufacturing while that that overall spending plans were positive in most of the districts.
As for the present improved housing sector the Fed affirmed and confirmed clearly that the real estate enhanced clearly in most of the countrys districts but that the mortgage lending showed "slow improvement", having in mind that more Americans signed more contracts to purchase previously owned homes in July.
And turning to the countrys prices pressures U.S. economy released the PPI readings during September showing that inflation levels are under control which is keeping the Fed unafraid from inflation in general, as the current stabilization in prices keeps the Fed steady for an immediate stimulus action if conditions deteriorated further in the world’s largest economy.
In fact the Labor Department reported this week that Producer Prices rose in September by 1.1% compared to a previous reading of 1.7%, which is higher than previous estimate of 0.8%. The core reading of the index rose by 2.3% less than the previous and estimated readings of 2.5%.
According to the minutes of the Federal Open Market Committee’s Sept. 12-13 meeting “Members generally continued to anticipate that, with longer-term inflation expectations stable and given the existing slack in resource utilization, inflation over the medium term would run at or below the Committee’s longer-run objective of 2 percent."