Commerce Department

Commerce Department Reports Narrower Trade Gap

The U.S. Commerce Department reported the United States had a trade gap that narrowed 1.6% from September. The trade gap totaled $43.5 billion, in line with a consensus estimate from analysts before the report. However, the Commerce Department revised its estimate of the September trade deficit to $44.2 billion from $43.1 billion.

U.S. imports and exports declined in October, in a possible sign of weakening demand in the United States and abroad.

Imports fell 1.0% to $222.6 billion, led by a $3.6 billion drop in industrial supplies and materials. The average price for imported oil fell for a fifth consecutive month to $98.84 per barrel, from its May peak of $108.70. Imports of capital goods and food, feeds and beverages increased to records in October. Imports from China rose to a record $37.8 billion and imports from Japan increased to $12.3 billion, the highest since April 2008.

U.S. exports fell 0.8 percent to $179.2 billion, led by a $1.3 billion drop in industrial supplies and materials. The biggest monthly decline in that category was for non-monetary gold, which tumbled 25 percent to $3.5 billion.

U.S. exports to China increased to $9.7 billion, the highest since December. The U.S. trade gap with China went unchanged in October at $28.1 billion, but remained on track to surpass the annual record of about $272 billion set in 2010.

Rising consumer demand in the United States could push imports higher, particularly as the holiday shopping season gets under way. Retailers reported that shoppers got off to a healthy start over the Thanksgiving holiday weekend. And consumer confidence rose sharply last month.

The unemployment rate fell to 8.6% in November, its lowest level in two and a half years. Employers added a net total of 120,000 jobs. Still, half the drop in the rate resulted from a decline in the work force.

In October, Congress approved free trade agreements with South Korea, Colombia and Panama, after four years without any new trade deals. The administration says the three deals will boost U.S. exports by $13 billion a year.

New Home Sales Rise 1.3%, Home Prices Down

The Commerce Department announced Monday that sales edged up 1.3% to a seasonally adjusted 307,000 unit annual rate, which was the fastest pace in five months, still below analysts’ expectations. The supply of new homes in the market would last 6.3 months at the current pace of sales. The median sales price of new houses sold in October 2011 was $212,300; the average sales price was $242,300. The seasonally adjusted estimate of new houses for sale at the end of October was $162,000.

The report suggests housing continues to drag on the U.S. economy and is a long way from recovering.

While new homes sales represent a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders. Many Americans believe it is just too risky to buy a home right now so soon after the housing bubble burst from four years ago.

While home prices have fallen, unemployment at over 9% has taken its toll on consumers. Many consumers who wish to buy a home simply cannot due to higher down payments and loan qualifications they cannot meet.

Mortgage rates continue to hover at historic lows. Refinancing has been a boon for mortgage companies, but that does nothing to address the glut of houses for sale on the market. Also, with the number of foreclosures and short sales on the market, consumers are more apt to purchase one of those vice a new home.

Sales of previously owned homes rose slightly last month to a seasonally adjusted annual rate of 4.97 million units, the National Association of Realtors said last week. That’s below the 6 million that economists say is consistent with sales in a healthy market and barely ahead of last year’s totals, which were the fewest since 1997.

New Home sales data for November 2011 will be released on Friday December 23, 1011 at 10:00 am ET.

Commerce Department Reports Durable Goods Orders Rise

The Commerce Department reported on Wednesday durable goods orders excluding transportation rose 0.7% after a downward revision of 0.6% increase in September. Economists had forecast this category unchanged from the previously reported 1.8% rise.

Weak demand for transportation equipment saw overall orders falling 0.7% after declining 1.5% in September. Economists had forecast overall orders dropping 1.0% last month.

Shipments of manufactured durable goods in October, up five of the last six months, increased $2.6 billion or 1.3% to $203.0 billion. This followed a 0.5% September decrease. Transportation equipment, up following two consecutive monthly decreases, had the largest increase, $2.4 billion or 5.2% to $48.4 billion.

Unfilled orders for manufactured durable goods in October, up eighteen of the last nineteen months, increased $1.9 billion or 0.2% to $886.0 billion. This followed a 0.6% September increase. Machinery, up twenty one consecutive months, had the largest increase, $1.8 billion or 1.5% to $117.7 billion.

Inventories of manufactured durable goods in October, up twenty two consecutive months, increased $1.8 billion or 0.5% to $367.2 billion.

The tone of the Commerce Department’s report was weakened by a drop in non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending. The category fell 1.8% last month after a downwardly revised 0.9% rise in September. It was the largest decline since January, when it fell 4.8%. Economists had expected a drop of 0.6% from the previously reported 2.9% jump.

The Commerce Department also reported spending increased 0.1% last month, the poorest gain in four months. But incomes increased 0.4%, the best showing since March.

U.S. GDP Growth Revised Down To 2% For 3Q

The Commerce Department released a statement on the Unites States economy as related to the GDP (Gross National Product). Commerce reported real gross domestic product, the output of goods and services produced by labor and property located in the United States, increased at an annual rate of 2.0% in the third quarter of 2011 (that is, from the second quarter to the third quarter) according to the “second” estimate released by the Bureau of Economic Analysis.

In the second quarter, real GDP increased 1.3%. The GDP estimates released today are based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.5%.

Corporate profits were up 7.9% year-over-year in the third quarter. Business spending boosted growth somewhat. Investment in equipment and software grew at a 15.6% annual rate, down from a 17.4% rate originally reported.

Consumer spending was a major driver of economic growth, but was revised slightly lower to a 2.3% rate in the third quarter. That’s still much stronger though than sluggish 0.7% growth in the prior quarter. The report showed real disposable income fell 2.1% in the third quarter after declining 0.5% in the prior three months.

Export growth was stronger than previously estimated, rising at a 4.3% rate instead of 4.0 %. Imports increased at a much slower 0.5% rate rather than 1.9% rate. Trade contributed almost half a percentage point to GDP growth. Elsewhere, residential construction grew at a 1.6% rate instead of 2.4%. Government spending fell at a 0.1% rate instead of being flat.

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