It’s Friday and that means it’s time to review the latest economic data and identify which pockets of the economy are heating up and which are slowing down. Don’t worry about catching every headline and every report throughout the week—I recap all of the most important news impacting your wealth right here every Friday. Let’s take a look at this week’s big headlines, starting with what was by far the biggest report of the week:
Stockpile Growth Slows Down
In December, wholesale inventories rose 0.3%, below expectations of a 0.5% gain. This is also a slower pace than the 0.5% increase recording in November. Excluding autos, core wholesale inventories also improved 0.3%. With the latest numbers, economists could very well trim their estimates for fourth-quarter GDP to reflect 2.3% growth. While wholesale stockpiles underperformed expectations in December, 2013 as a whole brought a 3.9% rebound in inventories. However, economists also consider the current level of inventory unsustainable and that businesses won’t stock their shelves as quickly in the first quarter.
In December, business inventories improved 0.5%, matching economists’ estimates. Retail inventories, which exclude automobiles, rose 0.2%. Business sales climbed 0.1%. At the current sales pace, it would take 1.3 months for businesses to clear their inventories. This is good news. Despite softer wholesale stockpile growth, inventories as a whole finished 2013 on a high note. According to the government’s advance estimate, fourth-quarter inventories rose $127.2 billion, the largest rise since 1998.
All Quiet On the Jobs Front
Initial claims for unemployment rose by 8,000 to a 339,000 annual rate. Economists had expected jobless claims to tick up 4,000 to 335,000. The four-week moving average rose from 333,250 to 336,750. As I mentioned last week, the severe winter weather is putting a damper on hiring, especially in retail. But I wouldn’t take this modest uptick as proof of a prolonged slowdown, not yet.
Cold Weather Curtails Retail Sales
In January, retail sales fell 0.4%; economists had expected sales to fall by half that much. The weakest areas were in automobile, clothing and furniture sales. Meanwhile, sales of building materials and garden equipment advanced 1.4%—likely in snow removal equipment. In December, retail sales were revised lower to reflect a 0.1% decline (down from a 0.2% increase). The latest retail sales numbers caught economists off guard, but it didn’t seem to surprise Wall Street too much. For a lot of folks, it’s too chilly for them to do a lot of serious shopping (especially car buying). So the general expectation is that consumer spending will heat back up once spring kicks off.
Have a nice weekend,