Layoffs saw a large drop, while consumer credit growth slowed, and wholesale inventories and sales both surged.
Initial Jobless Claims
First-time claims for unemployment benefits filed by the newly unemployed during the week ending Feb. 4 plummeted past predictions to 234,000 claims, a tumble of 12,000 claims from the preceding week’s total of 246,000 claims, the Employment, and Training Administration reported last week. The market had expected jobless claims of 250,000 for the week.
Applications for unemployment benefits have been below the 300,000-claim mark for 101 weeks now. Economists consider levels below 300,000 claims to indicate a growing job market.
The four-week moving average — considered a more stable measure of layoff activity — dipped to 244,250 claims, a drop of 3,750 claims from the prior week’s average of 248,000. This marked the lowest total for the four-week average since Nov. 3, 1973’s average of 244,000.
Consumer borrowing continued to grow during December but slowed its pace after November’s sizable gains. Total consumer credit increased 4.5 percent for the month to a total of $3.76 trillion, according to last week’s report from the Federal Reserve, which was down from November’s 8.1 percent gain.
Revolving debt, such as credit cards, was the big reason for December’s slowing. Revolving debt only grew 2.9 percent in December to a total of $995.5 billion, which was well down from November’s whopping 14.4 percent growth. Non-revolving debt, such as student or car loans, demonstrated much more stable performance, growing 5.1 to a total of $2.76 trillion, which was relatively in line with November’s 5.9 percent growth.
The slow-down was an unexpected turn for economists, which had expected a $19.4 billion gain, and was the slowest pace of growth since 2013.
Wholesale inventories followed up November’s gain by growing a solid 1 percent in December to hit $601.1 billion, the Census Bureau reported. Compared to last year, wholesale inventories were 2.6 percent higher than December 2015. Wholesale inventories are important to watch because they indicate the level of demand that wholesalers expect from their retailer customers, which hints at future increases or decreases in retail activity.
Sales for wholesalers in December hit their biggest monthly increase since 2011, growing 2.6 percent from November to hit $464.9 billion for the month. Compared to last year, December’s wholesale sales were 6.8 percent higher than December 2015’s sales.
The December inventories-to-sales ratio for wholesalers came in at 1.29. For comparison, the December 2015 inventories-to-sales ratio was 1.35.
This week, we can expect a light calendar of economic reports, due to the holidays:
Tuesday: The Producer Price Index for January from the Bureau of Labor Statistics.
Wednesday: The Consumer Price Index for January from the Bureau of Labor Statistics; retail sales for January and business inventories for December from the Census Bureau; industrial production and capacity utilization from the Federal Reserve.
Thursday: Housing starts and building permits from the Census Bureau; initial jobless claims from the Employment and Training Administration.
Friday: Leading economic indicators for January from The Conference Board.