JANUARY 20, 2020 – SOME OPTIMISM AS DECEMBER DATA IS RELEASED
Phase One of a new US-China trade agreement was signed last week. Though not exactly the agreement most were hoping for, it is movement towards some sort of resolution to the ongoing stalemate. As well, December figures for housing starts, manufacturing output and consumer spending were released last week, strengthening the view the economy maintained a moderate growth pace at the end of 2019.
US home building reached a 13-year high in December, suggesting the housing market is recovering amid low mortgage rates. Housing starts, which rose by 16.9% to the highest level since 2006, could help hold up the longest economic expansion on record.
December US manufacturing output rose with increases in the production of durable goods, foods and beverages and other products, which overcame a drop in motor vehicle output. Overall, manufacturing production rose 0.2%, doubling that seen in November. The manufacturing sector had been hard hit by the 18-month China-US trade war.
US retail sales rose for a third straight month, which could strengthen the belief the economy maintained a moderate growth rate at the end of 2019. Despite the fact there was a slowdown in job growth in December, and wage gains fell below 3%, consumer are still supporting the 11th year of expansion.
With economic data holding steady, it is unlikely the Fed will feel the need to adjust interest rates any time soon.