U.S. international goods and trade deficits widened after exports held steady and imports advanced because of the higher price of energy. Deficits with China, Japan, and the European Union expanded.
Producer price inflation rose at the fastest pace in five months in January, due to an increase in the cost of services. Core inflation rose at the fastest pace in a year.
Retail and food services sales in January fell reversing the gains in December, the largest decrease in sales since March last year. Sales of motor vehicles and parts and at gas stations were among the leading decliners.
Elevated shelter and food price inflation kept overall consumer price inflation ahead of market expectations. Core inflation was stable and stayed significantly ahead of the Fed's target rate.
The U.S. merchandise deficit shrank and the service surplus rose, driving the overall deficit to the lowest level in three years. However, the rearranging of the supply chain by the Chinese manufacturers drove the deficit with Mexico and Vietnam higher.
The U.S. economy added jobs at a faster pace in January, and the jobless rate held steady. Job gains in November and December 2023 were revised higher by a combined 126,000.
New home sales rebounded in December and rose for all of 2023 as buyers struggled with affordability and elevated mortgage rates. However, average and median home prices declined in 2023 from the previous year.
Retail sales in December increased indicating resilient consumer spending. in the full-year 2023, food services and drinking places soared in double digits but furniture and home goods, garden supplies, and gasoline station sales declined.
December saw a rise in consumer price inflation, but core inflation painted a different picture. Over half of the increase in monthly inflation was driven by the rise in housing costs.
The U.S. trade deficit declined in November after service surplus rose more than exports. Exports and imports in the month declined, and the deficit with China and the European Union declined.
