Economy This Week: Productivity Up 2.6% in 2006; Consumer Credit at Record $2.4 trillion

Among the key US economic indicators this week: ISM services index rose to 59; productivity grew a healthy 3% annual rate in Q4; consumer credit surged 4.5% to a record $2.4 trillion in 2006; initial jobless claims increased 3,000 last week; and January retails chain store sales jumped a strong 3.7%

ISM Services Index:

In a surprise positive move for services industry, the Institute for Supply Management said that its index of business activity in the non-manufacturing sector advanced to 59.0 in January from 56.7 in December. Wall Street analysts had expected a reading of 57 for the latest month.


  • Non-manufacturing business activity increased for the 46th consecutive month in January. 
  • Business Activity increased at a faster rate in January than in December. 
  • New Orders and Employment increased at slower rates than in December. 
  • The Prices Index decreased 4.5 percentage points this month to 55.2%.
  • The overall indication in January is continued economic growth in the non-manufacturing sector at a faster pace than in December.


US worker productivity grew at a healthy 3% annual rate in the final quarter, while the productivity for all of 2006 expanded at the slowest pace in nine years, according to data from the Labor Department. 

Productivity, the amount of output for an hour of work, rose by 2.1%for all of 2006, down slightly from a 2.3% increase in 2005. It was the slowest pace since a 1.6% gain in 1997, 

Labor costs for each unit of output rose 3.2% for all of 2006, up from a 2% increase in 2005. This is the fastest rise in worker wages and benefits since a 4.2% increase in 2000. For the fourth quarter, wages were up 1.7%.

Consumer Credit:

U.S. consumer credit increased 4.6% in 2006, compared to 4.2% gain in 2005 and 5.5% rise in 2004, according to the Federal Reserve. 

Consumer credit rose at an annual rate of 3.7% in Q4, down from a 5.5% pace in the third quarter.

For December:

  • Consumer credit increased at an annual rate of 3% in December. 
  • Revolving loans, a category that includes credit card debt, rose at an annual rate of just 0.8% in December, compared to a 13.8% jump in November.
  • Consumer borrowing in auto and other types of nonrevolving loans rose at an annual rate of 4.3% in December after a 2.9% gain in November.
  • The total consumer credit outstanding surged $6 billion in December to an record $2.4 trillion.

For all of 2006, consumer borrowing grew by $105 billion compared to an increase of $93.2 billion in 2005.

Initial Jobless claims:

In the week ending Feb. 3, the advance figure for seasonally adjusted Initial jobless claims increased 3,000 in the week ending Feb. 3 to  311,000, according to the Labor Department. The 4-week moving average was 308,250, an increase of 3,250 from the previous week's revised average of 305,000. Full Report

Wholesale Trade:

Wholesale sales rose 1.8% in December after rising 0.9% in November. Sales of durable goods rose 1.1 percent, while sales of non-durable goods rose 2.5 percent, according to the Commerce Department.

Wholesale inventories unexpectedly fell 0.5% in December compared to the previous month.

The report said inventories/sales ratio came in at 1.17 in December, unchanged from the same month of the previous year.

Retail Chain Store Sales:

U.S. chain store sales increased by a strong 3.7% in January on a year-over-year basis, driven by the arrival of cold winter weather and  gift card purchases, according to ICSC’s index.

Luxury stores led the way as sales grew by an impressive 11.2 percent for the month. 

Drug stores and department chain stores also posted strong results as sales increased by 8.8 percent and 6.7 percent, respectively in January. 

ICSC expects comp-store sales to increase by 3% for February as retailers continue to clearance out their winter-related items to make room for spring merchandise.

ICSC-UBS Retail Sales:

The International Council of Shopping Centers-UBS Retail Chain Store Sales Index rose by 1.3% in the week ended Feb. 3, compared to 0.9% decline in the prior week.

Year-over-year chain store sales growth slowed to 4.3%, down from a 4.9% increase last week.

Grocery stores were the main driver behind the increase in sales with Super Bowl shoppers stocking up on food and snacks, according to ICSC. 

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