Trade, jobs data highlight continued strength, resilience in U.S. economy
It was a hat trick on Wednesday with three economic reports highlighting the continued strength of the U.S. economy.
In 2019, the goods and services deficit fell to $616.8 billion, down $10.9 billion from $627.7 billion in 2018, the Commerce Department reported Wednesday. This was the first annual decline in the trade deficit since 2013.
The deficit with China decreased $73.9 billion to $345.6 billion in 2019. Exports to China last year decreased $13.5 billion to $106.6 billion and imports decreased $87.4 billion to $452.2 billion.
Deficits for 2019 were also recorded with the European Union ($177.9 billion), Mexico ($101.8 billion), Japan ($69.0 billion), Germany ($67.2 billion), Ireland ($52.7 billion), Italy ($33.4 billion), Malaysia ($27.4 billion), Canada ($27.0 billion), Switzerland ($26.7 billion), India ($23.3 billion), Taiwan ($23.0 billion), South Korea ($20.6 billion), Thailand ($20.2 billion), France ($19.7 billion), Russia ($16.5 billion), and Indonesia ($12.4 billion).
The 2019 figures show surpluses with South and Central America ($53.7 billion), Hong Kong ($26.1 billion), Netherlands ($21.5 billion), Australia ($15.2 billion), Belgium ($14.6 billion), Brazil ($12.2 billion) and the United Kingdom ($6.0 billion).
In December, the goods and services deficit was $48.9 billion, up $5.2 billion from a revised $43.7 billion in November, originally reported at $43.1 billion. Economists surveyed by IFR Markets had expected a December deficit of $48.0 billion.
In the employment sector, private sector jobs increased by 291,000 in January, according to the ADP National Employment Report released Wednesday.
Economists surveyed by IFR Markets predicted there would be 159,000 new jobs last month.
The report is produced by the ADP Research Institute in collaboration with Moody’s Analytics.
“The labor market experienced expanded payrolls in January,” said Ahu Yildirmaz, vice president of the ADP Research Institute. “Goods producers added jobs, particularly in construction and manufacturing, while service providers experienced a large gain, led by leisure and hospitality. Job creation was strong among mid-sized companies, though small companies enjoyed the strongest performance in the last 18 months.”
The report is derived from ADP’s actual payroll data, which represents 411,000 U.S. clients employing nearly 24 million workers in the U.S. The December total of jobs added was revised down from 202,000 to 199,000.
“Mild winter weather provided a significant boost to the January employment gain. The leisure and hospitality and construction industries in particular experienced an outsized increase in jobs,” said Mark Zandi, chief economist of Moody’s Analytics. “Abstracting from the vagaries of the data underlying job growth is close to 125,000 per month, which is consistent with low and stable unemployment.”
On Friday, the Labor Department will release the January employment report. Economists polled by IFR Markets expect non-farm payrolls to have risen by 130,000 last month after gaining 145,000 in December.
Also on Wednesday, the Institute for Supply Management said that economic activity in the non-manufacturing sector increased in January for the 120th straight month.
“The NMI registered 55.5%, which is 0.6 percentage point higher than the seasonally adjusted December reading of 54.9%,” said Anthony Nieves, chair of the ISM’s non-manufacturing business survey committee. “This represents continued growth in the non-manufacturing sector, at a slightly faster rate.”
The non-manufacturing business activity index increased to 60.9%, 3.9 percentage points higher than the seasonally adjusted December reading of 57.0%, reflecting growth for the 126th consecutive month. The Employment Index fell to 53.1% in January from the seasonally adjusted December reading of 54.8%.
The prices index dropped to 55.5 from the seasonally adjusted December reading of 59.3%, indicating that prices increased in January for the 32nd month in a row.