International Trade Balance
The U.S. trade deficit in goods and services narrowed to $43.5 billion from $44.3 billion in October. Exports fell 0.8% to $179.2 billion and imports fell 1.0% to $222.6 billion. The trade deficit in goods narrowed to $58.8 billion and the trade surplus in services fell $0.1 billion to $15.3 billion in October. Domestic demand remains weak and this was the third decline in imports in five months. With weakness in the global economy, we do not expect much improvement in exports, which should lead to an expansion of the trade deficit in coming months.

Consumer Credit
In October total consumer credit grew 3.7% at an annual rate, or $7.7 billion, to a total of $2.458 trillion. The rise in consumer credit was due to an increase in both non-revolving and revolving credit. Revolving credit rose 0.6% at an annual rate to $792.3 billion, after increasing at the same pace in September. Non-revolving credit increased at a 5.3% annual rate after increasing at a 4.7% pace in the previous month. Consumer demand picked up a bit in October as rates remain low and the household savings rate has trended downward. We expected continued efforts to pay down revolving credit balances in coming months, but at a slower pace than during the past two years.

ISM Nonmanufacturing Index
In November, the Institute for Supply Management’s nonmanufacturing index fell to 52.0 from 52.9 in October. Although the survey showed a modest decline, the index remains above the threshold of 50 for an expanding economy. Moreover, only two index components, employment and supplier deliveries, declined. The employment index dropped substantially in November, losing 4.4 points to drop to 48.9 from 53.3 in October. The service sector remains on the mend but we still aren’t seeing much positive confidence in the labor force. We will need to see demand increase beyond current levels to see much sustained improvement in business confidence.