U.S. data disappoints, European shares lower, Wall Street pointed to weaker open

U.S. data disappoints, European shares lower, Wall Street pointed to weaker open

29 October 2015, 13:56
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The U.S. economy slowed to annual growth rate of 1.5% in the third quarter from 3.9% in the spring, mostly due to a smaller buildup in warehouse inventories. 

However, the main engine of U.S. economic growth, consumer spending, rose 3.2% after an even stronger gain in the second quarter. The steady pace of spending will possibly enter the fourth quarter, helped by cheaper gas prices, rising inflation-adjusted incomes and a big burst in hiring over the past several years.

Business investment in equipment climbed 5.3% in the third quarter, more than offsetting a 4% drop in spending on structures such as oil platforms or commercial buildings. Outlays on home construction rose 6.1%. Although these areas appeared to be robust, this was unable to fully offset weak investment in inventories. The value of warehouse merchandise rose by $56.8 billion in Q3, a sad comedown from gains of $113.5 billion and $112.8 billion in the prior two quarters.

Exports rose 1.9%, with imports up 1.8%.

Inflation as gauged by the PCE index rose at a 1.2% annual pace in the third quarter, or 1.3% minus food and energy.

Separately, the U.S. Department of Labor said in a report that the number of individuals filing for initial jobless benefits in the week ending October 24 increased by 1,000 to a seasonally adjusted 260,000 from the previous week’s total of 259,000. Analysts had expected jobless claims to rise by 4,000 to 263,000.

First-time jobless claims stayed below the 300,000-level for 33 consecutive weeks, which is usually associated with a firming labor market.

Continuing jobless claims in the week ended October 17 dipped to 2.144 million from 2.181 million in the preceding week. Analysts had expected continuing claims to dip to 2.160 million.

The four-week moving average was 259,250, a decrease of 4,000 from the previous week’s total of 263,250. The monthly average is seen as a more accurate gauge of labor trends because it reduces volatility in the week-to-week data.

European shares reversed course after rising earlier on Thursday, pulled down by disappointing quarterly results, while Asian shares held on to meager gains. London's FTSE 100 was 1.04% lower, while German DAX dipped 0.40%. France's CAC 40 lost 0.77%.

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