Daily Economic Update: Trade Deficit, Jobless Claims

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights the trade deficit and jobless claims.

• The U.S. trade deficit rose from $40.3 billion to $46.3 billion in January according to the Department of Commerce.  The expansion of the deficit was largely a result of increased imports of capital goods and industrial inputs and not petroleum, though.  While roughly $2 billion of the $4.4 billion increase in imports of industrial supplies and materials was from petroleum products, the rest was from an expansion of other inputs (e.g. other precious metals, iron, wood pulp, etc.).  Furthermore, the $2.1 billion increase in capital goods except automobiles was concentrated in machinery and equipment.  This pattern suggests that domestic producers are building resources to meet an anticipated increase in demand.
• Jobless claims jumped 26,000 for the week of March 5^th to 397,000.  The sharp increase came on the heels of two strong, consecutive weekly declines and was likely the result of a correction in the wake of the 4-day holiday week just one week prior.  Claims remain below the 400,000 mark, the critical level at which more jobs are being created than cut putting downward pressure on the unemployment rate.   Four of the nine states reporting a decline in claims of 1,000 or more reported fewer layoffs in the construction industry as a factor.
• The drop in claims data reflects stronger employment growth, but job creation remains sluggish and erratic.  The 4-week average is headed in the right direction, though.  January’s import data suggests that businesses are building up the resources to expand, which should help hiring going forward.  Job creation is critical for a sustained economic and housing recovery as it boosts confidence to make large purchases and it undermines the factors that cause delinquency and foreclosures.