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Data Show US Economy on Remains on Solid Ground

Matt Eidinger November 21, 2019

As financial market news takes a backseat to the ongoing Trump impeachment inquiry, key economic data out of the US demonstrated the US economy remains on solid ground.

The Federal Reserve Bank of Philadelphia’s Business Outlook Survey registered a robust reading of 10.4, rebounding almost five points from last month’s rather unencouraging 5.6. 

The US manufacturing sector has been under considerable pressure during most of 2019 and today’s better than expected figures from the Philly Fed will certainly go a long way to calming fears of a manufacturing recession and a sustained pullback in business investment.

The US Department of Labor (DOL) released a report on the labor market that appeared less upbeat than markets were hoping for. According to the weekly unemployment insurance claims report, there were 227,000 new filings for unemployment insurance during the week ending November 16 – 8,000 more than expected and unchanged from last week’s revised print.

Furthermore, although initial jobless claims moved up to a five-month high, they remain at a 50-year low. Indeed, the Goldilocks economy is in the house.

The less volatile four-week moving average registered a reading of 221,000 and continuing claims came in at 1,695,000 for the week ending November 9 – also up slightly from last week.

Today’s data comes less than a day after the US Federal Reserve released the minutes for their October meeting. The meeting minutes painted a picture of a somewhat cautious Fed that cut borrowing costs by a quarter point last month amidst fears of weakening economic growth and trade tensions.

In Canada, Automatic Data Processing (ADP) released private sector payroll data from October. According to the report, the Canadian Economy shed 22,600 jobs during the month of October. Most losses came from trade/transportation and utilities.

Also north of the border, the Canadian dollar regained some of the territory lost earlier in the week after Bank of Canada Governor Stephen Poloz remarked that monetary conditions seem “about right” at a “fireside chat” event held by the Ontario Securities Commission.

The trade-weighted dollar index (DXY) has been relatively flat this week and this morning was much of the same, with the index barely budging from 97.85.

According to today’s data, the US Federal Reserve’s decision to cut rates at three consecutive readings is completely justified. After several months of weaker than expected manufacturing data points, today’s release from the Philly Fed points to optimism in the months ahead.

Matthew Eidinger
Fintech Specialist, Dealing operations

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