A WEEKLY ECONOMIC UPDATE FROM CONGRESSMAN GREGORY W. MEEKS Economic Activity
Employment
• For the week ending December 25, initial claims for unemployment insurance decreased by 34,000 to 388,000, the lowest level since July 2008. The four-week moving average of initial UI claims (which smoothes weekly volatility) was down 12,500 to 414,000, also reaching the lowest level since July 2008. (Employment and Training Administration)
Macroeconomic Indicators
• The Conference Board leading index of economic indicators increased 1.1 percent in November. Nine of the ten leading components advanced; supplier deliveries, the interest rate spread, and average weekly initial claims for unemployment insurance were the strongest positive contributors. The only negative contributor was building permits. Over the past six months, growth in the leading index increased by 2.2 percent. (The Conference Board)
• The Chicago purchasing managers’ index (PMI) jumped 6.1 points to 68.6 in December and reached the highest level since July 1988. This increase signals an improvement in the pace of expansion in business activity. The survey primarily covers the Midwest region and includes both manufacturing and non-manufacturing firms. (Readings above 50 indicate activity is expanding.) The index has risen for four straight months, averaging 63.9 in Q4, above the Q3 average of 59.8. (Institute for Supply Management-Chicago (ISM-Chicago))
Consumer Confidence and Spending
• In December, the Thompson Reuters/University Michigan index of consumer sentiment reached its highest level in six months and its second highest level since the start of 2008. The gain was due to improved employment expectations that made consumers more willing to spend and adopt more favorable prospects for the overall economy. The index was 74.5 in the December 2010 survey, up from 71.6 in November and 67.7 in October. (Thompson Reuters/University of Michigan)
• The National Federation of Independent Business (NFIB) small business optimism index rose 1.5 points to 93.2 (1986=100) in November, the highest level since December 2007. This was the fourth consecutive gain. (National Federation of Independent Business)
• Total retail and food services sales rose 0.8 percent in November after an upwardly revised 1.7 percent rise in October. Sales were up 7.7 percent from a year ago. (Census Bureau)
GDP
• Real GDP rose 2.6% at an annual rate in the third quarter. (Bureau of Economic Analysis)
Production
• The Institute for Supply Management index of manufacturing activity rose to 57 in December from 56.6 in the previous month. Any reading over 50 indicates growth. According to the ISM survey, economic activity in the manufacturing sector expanded in December for the 17th consecutive month, and the overall economy grew for the 20th consecutive month. The latest report shows that manufacturers carried considerable momentum into the new year. (Institute for Supply Management)
• Manufacturing activity in the Central Atlantic Region expanded at a solid pace in December, with expectations for the future upbeat. The seasonally adjusted composite index of manufacturing activity rose 16 points to 25, from November’s reading of 9. (Federal Reserve Bank of Richmond)
• The Chicago Business Barometer achieved its highest level since July 1988, expanding for the 15th consecutive month. Production reached its highest levels since October 2004; new orders improved to 2005 levels; employment reached its highest level in more than 5 years; prices paid accelerated to its highest point since July 2008. (Institute for Supply Management – Chicago)
• Total industrial production (IP) increased 0.4% in November, the largest gain since July. Over the past 12 months, IP has risen 5.4%. Manufacturing output, which accounts for most of the index, rose 0.3% in November. (Federal Reserve)
Housing
• The pending home sales index rose 3.5% in November. (National Association of Realtors)
• Housing starts increased 3.9% in November to 555,000 units at an annual rate from the upwardly revised October level. This month’s increase was largely driven by single family starts, which increased 6.9%. (Commerce Department)
Personal Income
• Real disposable personal income (DPI) rose 0.2% in November, after a 0.2% increase last month. Real DPI rose 2.4% over the past twelve months. (Bureau of Economic Analysis)