US confidence surges amid cooling jobs, rising trade deficit
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The news: US data showing rising US consumer confidence, a cooling labour market and a widening trade deficit gave mixed economic signals, highlighting the challenge for policymakers to balance growth optimism with signs of slowing job demand and trade pressures.
The numbers: US consumer confidence surged in October, marking the strongest monthly rise since March 2021, as optimism over the economy and labour market grew.
The Conference Board’s index rose 9.5 points to 108.7, surpassing forecasts.
The boost in confidence, however, came alongside data from the Bureau of Labor Statistics showing a decline in job openings to 7.44 million in September, the lowest since January 2021, according to its JOLTS survey.
The data underscores a cooling labour market, with layoffs rising 165,000 to 1.83 million and voluntary quits down, while hiring saw a slight increase.
Elsewhere, the US Census Bureau also released trade figures on Tuesday (Wednesday morning AEDT). The US trade deficit in goods surged by 14.9% in September to USD108.2 billion ($162.04 billion), the highest in over two years, as imports rose 3.8% amid strong consumer demand and stockpiling ahead of a potential portworkers’ strike.
The context: The data comes just days before the US presidential election and ahead of the Federal Reserve meeting In November, where the FOMC is still expected to cut rates by at least 25 basis points.
The next major data release before the Fed’s interest rate decision is the government’s first estimate of third-quarter economic growth on Wednesday as well as September inflation on Friday.
What they said: Dana Peterson, the Conference Board’s chief economist, said “all five components of the Index improved. Consumers’ assessments of current business conditions turned positive. Views on the current availability of jobs rebounded after several months of weakness, potentially reflecting better labor market data,” she said.
“Compared to last month, consumers were substantially more optimistic about future business conditions and remained positive about future income. Also, for the first time since July 2023, they showed some cautious optimism about future job availability.”
Stephen Stanley, a US economist from Santander said the intense fluctuations in JOLTS job openings data were becoming tiresome, noting vacancies have swung by hundreds of thousands in recent months. “Pay attention to the trend but do not get overly excited at the month-to-month wiggles,” he said.
Lou Crandall, an economist at ICAP, said that by itself the widening trade deficit could reduce “nearly a percentage point from the 'net exports' contribution to our previous estimate of third-quarter GDP. However, there was a partial offset in retail inventories, so we are lowering our forecast for tomorrow's advance estimate from a 3.2% annualized rate to 2.7% pace."
