In last week’s holiday-shortened schedule, economic data was highlighted by Wednesday’s initial jobless claims and durable goods orders. Weekly initial jobless claims rose 21,000 to the highest level since September. However, the four-week average of claims remained below 300,000 for the eleventh straight week. This week’s claims data also included the continuing claims figure that will be used to calculate the unemployment rate for November and showed 71,000 fewer continuing claims than last month, suggesting the headline unemployment rate could fall further when reported this Friday.
Last week’s trading was notable for a sharp plunge in oil prices following OPEC’s surprise decision to maintain output despite falling prices and excessive global supplies. The weakness in oil, which has pushed West Texas Intermediate crude near its lowest level since July 2009, has been exacerbated by signs of slowing global growth. The S&P GSCI Crude Oil commodity index is down more than 32% year to date.
For the week, the S&P 500 rose +0.20%, the Dow Jones Industrial Average added +0.10%, and the MSCI EAFE (developed international) increased +0.48%.
Here are the 3 stories this week that rose above the noise:
Black Friday Fatigue? Thanksgiving Weekend Sales Slide 11%
Spending over the four-day Thanksgiving weekend declined by an estimated 11% compared to last year, according to the National Retail Federation. Many analysts predicted strong growth in Black Friday sales this year because of rising consumer confidence and labor growth, falling energy costs, and the increase in retailers open on Thanksgiving. But it’s still possible for overall holiday season spending to increase compared to 2013.
Consumers might not be as enticed by Black Friday bargains as in years past because retailers now provide deep discounts on prices throughout the entire holiday season and also provide special online discounts.
Lower Gas Prices: How Big a Boost for the Economy?
A blog posting from The Wall Street Journal provides a nice summary of what impact lower oil prices are likely to have on the U.S. economy. The benefits that most businesses and consumers receive from falling energy prices are partially offset by headwinds potentially created from reduced investments by the domestic energy industry. However, as the energy industry still represents a relatively small percentage of employment, the net impact of lower oil prices is likely to be a 0.2 to 0.3 boost to economic growth in 2015 if the price of oil remains near current levels.
US Manufacturers Still Outpacing Rest of World
U.S. manufacturers barely slowed down in November even as major competitors around the world continued to scale back production. The Institute for Supply Management said its U.S. manufacturing index edged down to 58.7% last month from 59% in October. Yet any number above 50% signals expansion, and the latest reading kept the ISM index near a three-year high. Fourteen of the 18 industries tracked by ISM said business increased in November while the closely watched new orders component hit a three-month high.
Articles chosen and summarized by the First Allied Asset Management, Inc. investment management team. First Allied Asset Management provides investment management and advisory services to a number of programs sponsored by First Allied Securities and First Allied Advisory Services. First Allied Asset Management individuals who provide investment management services are not associated persons with any broker-dealer.
International investing involves additional risk, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. Investing in companies involved in one specified sector may be more risky and volatile than an investment with greater diversification
