Consumer borrowing grew as reports indicated interest rates would increase. Meanwhile, layoffs shrank and wholesalers appeared to be preparing for increased orders.
Total consumer credit for October increased 5.2 percent from the previous month to hit $3.72 trillion, the Federal Reserve reported last week. The $16 billion gain over September was smaller than the $18.7 billion gain that the market had expected.
Revolving debt, such as credit cards, increased 2.9 percent to hit $981.3 billion in October. Non-revolving debt, such as student and car loans, increased 6 percent during the month, to reach $2.74 trillion for the month.
The news comes as the Federal Reserve was reported by many news outlets to be preparing to raise interest rates. The Federal Reserve’s monetary policy meeting runs through Wednesday, and is expected to yield a 0.25 percent gain.
Initial Jobless Claims
First time claims for unemployment benefits filed by the newly laid off during the week ending December 3 fell to 258,000, a sizable drop of 10,000 claims from the prior week’s total of 268,000, the Employment and Training Administration reported last week.
The four-week moving average — considered a more stable measure of layoffs — notched up to 252,500, a gain of 1,000 claims from the previous week’s average of 251,500.
This marked the 92nd straight week of initial jobless claims staying below 300,000, a threshold that economists consider indicative of a growing job market. This is the longest such streak since 1970.
Wholesale Sales and Inventories
Wholesalers’ inventories ticked down to $587.7 billion in October, which was 0.4 percent below September’s level, according to last week’s report from the Census Bureau. Compared to last year, total inventories for October were down 0.4 percent from October 2015.
Wholesale inventories are important because they indicate demand for goods from the retail market. Given that October’s decline in inventory was paired with a 1.4 percent increase in sales, with total sales hitting $452.2 billion for the month, most wholesale market watchers took this as a indicator that wholesalers were freeing up warehouse space for more orders.
Key sales categories included durable goods, which were up 1.1 percent in October; electrical and electronics, which grew 2.2 percent; sales of metals and minerals, except petroleum, which gained 2 percent; nondurable goods, which rose 1.6 percent; farm product raw materials, which shot up 8.3 percent; and petroleum and petroleum products, which gained 6.6 percent.
This week we can expect:
- Monday — November budget from the Treasury Department.
- Tuesday — Import and export prices for November from the Census Bureau.
- Wednesday — Retail sales and business inventories for November from the Census Bureau; producer price index for November from the Bureau of Labor Statistics; industrial production and capacity utilization for November from the Federal Reserve.
- Thursday — Consumer price index for November from the Bureau of Labor Statistics; initial jobless claims for last week from the Employment and Training Administration.
- Friday — Housing starts and building permits for November from the Census Bureau.